See what your bonus is really worth.
Enter your bonus and see the take-home after federal withholding, Social Security, Medicare and state tax. Remember: this is withholding at payroll, not your final tax bill. You settle up when you file.
Your bonus
What this means
Where your bonus goes
Bonus breakdown
Bonus scorecard
Take-home at different bonus amounts
Same method, state rate and salary. Shows how withholding scales and where the 37% tier on amounts over $1M would kick in.
| Bonus | Federal | FICA | State | Take-home | Withheld |
|---|
How bonuses are taxed
How Bonuses Are Taxed: The Flat Rate Method
The IRS classifies bonuses as supplemental wages, and most employers withhold federal income tax at a flat 22% rate on bonus payments up to $1 million. For bonus amounts exceeding $1 million, the withholding rate jumps to 37%. This flat rate method is simpler for employers and is separate from your regular paycheck withholding. Keep in mind that this is just the withholding rate, not your actual tax rate; your true tax liability is determined when you file your annual return.
Percentage Method vs Aggregate Method
Employers can choose between two withholding methods for bonuses. The percentage method applies the flat 22% rate to the bonus amount separately from your regular wages. The aggregate method combines your bonus with your most recent regular paycheck and withholds based on the combined amount as if it were a single larger paycheck. The aggregate method often results in higher withholding because it temporarily places you in a higher bracket, though you may receive the excess back as a refund when filing.
Social Security and Medicare on Bonus Pay
Bonuses are subject to Social Security tax (6.2%) and Medicare tax (1.45%) just like regular wages. Social Security tax applies until your total wages and bonuses for the year reach the annual wage base limit of $168,600 in 2024. Once you exceed this threshold, no additional Social Security tax is withheld, but Medicare tax continues with no cap. High earners above $200,000 also pay an additional 0.9% Medicare surtax on earnings beyond that threshold.
How to Reduce Taxes on Your Bonus
One of the most effective ways to reduce the tax impact of a bonus is to contribute it directly to a pre-tax retirement account like a 401(k). If your plan allows, you can increase your contribution percentage for the pay period in which you receive the bonus, sheltering a significant portion from immediate taxation. Other strategies include timing deductible expenses like charitable contributions to offset bonus income, or deferring the bonus to a year when you expect lower overall income.
Common questions
Why is my bonus taxed so heavily?
Bonuses are classified as supplemental income by the IRS. Most employers withhold at a flat 22% federal rate (37% for amounts over $1 million). Combined with Social Security, Medicare, and state taxes, your effective withholding rate can reach 35-45%.
Is my bonus actually taxed at a higher rate?
No. Bonuses are added to your regular income and taxed at your marginal rate when you file. The 22% flat withholding rate is just for payroll purposes. If your actual tax rate is lower, you will receive a refund. If higher, you may owe more.
How can I reduce the tax impact of my bonus?
Contribute the bonus to a pre-tax 401(k) or traditional IRA to reduce taxable income. You can also increase pre-tax deductions for the bonus pay period, or time the bonus to a year when your income is lower.
Do I pay Social Security tax on my bonus?
Yes, bonuses are subject to Social Security tax (6.2%) up to the annual wage base limit of $168,600 in 2024. If your salary plus bonus exceeds this amount, Social Security tax does not apply to the excess. Medicare tax (1.45%) has no cap.
Estimates only, based on 2024 federal rules. Withholding is not your final tax: your true liability is settled on your annual return, and you may get money back or owe more. State rules vary, some states withhold bonuses at their own flat supplemental rate. Verify with a tax professional.