Bonus Tax Calculator

How much of your bonus will you actually keep? Calculate withholding vs. actual tax and see if you will get money back at filing time. Updated for 2026 rates.

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How Bonuses Are Actually Taxed

Bonuses are classified as supplemental wages by the IRS. Your employer has two options for withholding federal tax:

  • Flat rate method: Withhold 22% federal (37% on any portion exceeding $1 million). This is the most common method.
  • Aggregate method: Combine the bonus with your regular paycheck and calculate withholding on the total as if it were a single large paycheck, then subtract the normal withholding. This often withholds more.

Both methods also apply Social Security (6.2%), Medicare (1.45%), and state withholding. The key insight is that withholding is not the same as your actual tax. Your bonus income is ultimately taxed at your marginal federal rate based on your total annual income.

Example: $10,000 Bonus on an $80,000 Salary

Bonus Amount$10,000
Federal Withholding (22%)-$2,200
Social Security (6.2%)-$620
Medicare (1.45%)-$145
State Tax (avg ~5%)-$500
Net Bonus (Take-Home)~$6,535

In this scenario, the $10,000 bonus pushes your total income from $80,000 to $90,000. Since both amounts fall within the 22% federal bracket (after the standard deduction), the withholding rate matches the actual tax rate. But if you earned $40,000, the bonus would be taxed at your actual 12% marginal rate, not 22%. You would get the difference back when you file.

Strategies to Maximize Your Bonus Take-Home

1. Increase your 401(k) contribution for the bonus paycheck. If your employer allows it, routing some or all of the bonus to your 401(k) reduces the taxable amount. You save on income tax (not FICA) and grow your retirement savings.

2. Check your W-4 withholding. If your regular paycheck already withholds more than needed, the extra withholding from the bonus may result in a large refund. Consider adjusting your W-4 to reduce regular withholding and keep more per paycheck.

3. Know that over-withholding comes back at tax time. The 22% flat rate often over-withholds for workers in the 10% or 12% bracket. You will get the difference back as a refund. It is not lost money, just temporarily held by the IRS.

Frequently Asked Questions

Are bonuses taxed at 40%?+
No. Bonuses are withheld at 22% federal (supplemental rate) plus 6.2% Social Security, 1.45% Medicare, and your state tax rate. This total can feel like 35-40%, but it is withholding, not your actual tax rate. At filing time, your bonus is taxed at your marginal income tax rate. If your marginal rate is below 22%, you will get money back. If it is above 22% (at higher incomes), you may owe a small amount.
Can I put my entire bonus into my 401(k)?+
It depends on your employer's plan. Some plans allow you to set a different contribution percentage for bonus pay. A pre-tax 401(k) contribution reduces your taxable income, meaning less tax on the bonus. However, FICA taxes (Social Security and Medicare) still apply to the full bonus amount before the 401(k) deduction.
Is the bonus tax rate different from the salary tax rate?+
No. Your bonus is ultimately taxed at the same marginal rate as the rest of your income. The difference is in withholding: employers use a flat 22% supplemental rate for bonuses (or 37% for bonuses over $1 million), while regular salary uses your W-4 settings. The actual tax owed is reconciled when you file your return.
Why are bonuses taxed so high?+
Bonuses are not actually taxed higher. They are withheld at a flat 22% federal rate (plus FICA and state), which can feel like more than your regular paycheck withholding. Your regular paycheck withholding is spread across the year to account for lower brackets. Since a bonus is a lump sum, the flat 22% rate simplifies the math for employers. You settle up when you file.
What is the difference between the flat rate method and aggregate method for bonus withholding?+
The flat rate method withholds a flat 22% federal tax on the bonus (most common). The aggregate method adds the bonus to your regular pay for that period and calculates withholding on the combined amount as if it were a single paycheck, then subtracts what was already withheld on regular pay. The aggregate method often withholds more, which is why your bonus paycheck may seem heavily taxed.