Bonus Tax Calculator
Bonuses are withheld differently from regular pay, and the flat 22% you have heard about is a withholding rate rather than a tax rate. This calculator shows both methods your employer is allowed to use and what each leaves in your account.
Tax year 2026 · Updated 2026-08-29 · Federal, state and local withholding · Free, no sign-up
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The two methods, and why they differ
Percentage method. The employer treats the bonus as supplemental wages, pays it separately from regular wages, and withholds a flat 22% for federal income tax — rising to 37% on cumulative supplemental wages above $1,000,000 in a year. Social Security, Medicare and state tax still apply on top. This is by far the most common approach because it is simple.
Aggregate method. The employer adds the bonus to a regular paycheck and runs the whole amount through the normal withholding tables. Because the percentage method annualizes, a bonus processed this way can look to payroll like an enormous salary for that one period and be withheld at 32% or more. It usually produces a bigger bite up front and a bigger refund later.
Neither method changes what you owe. A bonus is ordinary income taxed at your marginal rate. If your marginal rate is 12%, the 22% withheld comes back; if it is 32%, you may owe more at filing.
What a bonus is really worth
The figures below use the percentage method for a single filer already earning $80,000, in a state with no income tax.
| Bonus | Federal at 22% | Social Security and Medicare | Net received | You keep |
|---|---|---|---|---|
| $1,000 | $220 | $76 | $704 | 70.3% |
| $2,500 | $550 | $191 | $1,759 | 70.3% |
| $5,000 | $1,100 | $382 | $3,518 | 70.3% |
| $10,000 | $2,200 | $765 | $7,035 | 70.3% |
| $25,000 | $5,500 | $1,912 | $17,588 | 70.3% |
| $50,000 | $11,000 | $3,825 | $35,175 | 70.3% |
Add a state income tax and the kept share falls further — roughly 65% in Illinois, 63% in California at that income, and about 60% in New York City.
Timing, deferral and the tax you can control
The only genuinely controllable variable is which tax year the bonus lands in. If you expect a lower income next year — a sabbatical, a career change, retirement — a bonus paid in January rather than December can be taxed at a lower marginal rate. Some employers allow deferral into a non-qualified plan; most do not.
You can also absorb part of a bonus into a 401(k) if your plan permits deferrals from supplemental pay, which removes it from income tax although not from FICA. The 401(k) calculator shows the trade-off, and if your employer is trying to deliver a specific net amount, the gross-up calculator solves the problem from the other direction.
Frequently asked questions
Are bonuses taxed at 22%?
No. Bonuses are withheld at a flat 22% under the percentage method, but they are taxed at your ordinary marginal rate when you file. The 22% is a prepayment, and the difference is settled on your return.
Why was my bonus taxed at 40%?
Almost certainly the aggregate method, which combines the bonus with a regular paycheck and annualizes the total. A $10,000 bonus on top of a $3,000 bi-weekly check looks to payroll like a $338,000 salary for that period. The over-withholding is refunded when you file.
Can I avoid tax on a bonus?
Not avoid, but you can defer. Contributing the bonus to a traditional 401(k) or HSA where the plan allows it removes it from current income tax. FICA still applies to a 401(k) deferral.
Do bonuses count toward the Social Security wage base?
Yes. Bonuses are wages, so they count toward the $184,500 Social Security wage base for 2026. If your year-to-date wages have already passed it, no Social Security tax is withheld from the bonus at all.
Is a signing bonus taxed differently?
No. A signing bonus is supplemental wages like any other bonus and follows the same two withholding methods. If you leave and have to repay it, the tax treatment of the repayment is genuinely awkward and worth professional advice.