Bonus Tax Calculator

A bonus feels smaller than announced because bonuses are withheld under special "supplemental wage" rules — a flat federal rate, full payroll taxes, and state withholding all come out before you see a cent. This calculator models that withholding line by line, including the Social Security wage cap and the additional Medicare tax that high earners hit, and shows your estimated take-home.

How Bonus Withholding Works

Bonuses are ordinary income — taxed at your normal rates in the end — but withheld differently. Most employers use the IRS percentage method: a flat 22% federal withholding on supplemental wages up to $1 million in a year, and a mandatory **37$1 million. On top of that come payroll taxes and state withholding:

$\text{Net bonus} = \text{Bonus} - (\text{Federal} + \text{Social Security} + \text{Medicare} + \text{Additional Medicare} + \text{State})$

| Input | Meaning | | --- | --- | | Bonus amount | Gross bonus before any withholding | | Year-to-date earnings | Wages already paid this year — drives the SS cap and Medicare surtax | | State tax rate | Your state's withholding/income rate (default 5%, range 0–15%) |

The details that separate this from a naive "22% + 7.65%" estimate:

• Social Security (6.2%) applies only until your year's wages reach the $176,100 wage cap (2025). If your YTD earnings already exceed it, the bonus pays no Social Security tax at all; if the bonus straddles the cap, only the part under it is taxed.
• Medicare (1.45%) applies to every dollar, cap-free.
• Additional Medicare (0.9%) is withheld once your total wages pass $200,000 — on the portion above the threshold.

Worked Examples

Standard case: $10,000 bonus, no prior earnings, 5$2,200; Social Security $620; Medicare$145; state $500. Total withheld$3,465 → net $6,535, a 34.65% effective withholding rate.

High earner: $50,000 bonus on top of$190,000 already earned, 5% state. Federal $11,000; Social Security **$0** (already past the $176,100 cap); Medicare$725; additional Medicare — total wages reach $240,000, so$40,000 sits above the $200,000 threshold →$360; state $2,500. Total withheld$14,585 → net $35,415 (29.17% effective). Note the apparent paradox: the high earner keeps a larger share of the bonus, because the 6.2% Social Security layer has switched off.

Seven figures: on a $1.2 million bonus, federal withholding alone is$220,000 (22% of the first million) + $74,000 (37$200,000) = $294,000 before FICA and state.

Withholding Is Not the Tax

The most misunderstood point: the 22% is a withholding rate, not your tax rate. Your bonus is added to your salary on your Form 1040 and taxed at your actual marginal bracket. If that bracket is 12 or 22%, the flat withholding roughly settles or over-covers, and the excess returns as a refund; if you are in the 32–37% brackets, you will owe the difference at filing. Plan accordingly — a large bonus withheld at 22% by someone in the 35% bracket creates a predictable April bill, not a windfall. The calculator models withholding (what your payslip shows), not final liability; it also excludes local taxes, pre-tax 401(k) or HSA deferrals taken from the bonus, and the alternative aggregate withholding method some employers use, which can hold back more in the payment month. One more nuance: employers must withhold the additional Medicare tax past $200,000 of wages regardless of filing status, even though the final liability threshold differs for joint filers ($250,000) — the return reconciles it.

Frequently Asked Questions

Why does everyone say bonuses are taxed at 22%?

Because 22% is the flat federal withholding rate for supplemental wages under $1 million — the number on the payslip. Your true tax on the bonus is your marginal income-tax rate, settled when you file. The saying confuses the estimate with the bill.

My bonus check lost more than this calculator shows. Why?

Common extras: pre-tax retirement or HSA contributions deducted from bonuses, local city/county taxes, the aggregate withholding method (which can spike the payment month's rate), or garnishments. Compare the payslip line by line against the categories modeled here to find the difference.

Does the Social Security cap really switch off mid-bonus?

Yes. If your wages before the bonus are $170,000, only the first$6,100 of the bonus sits under the $176,100 cap and pays the 6.2%; the rest pays Medicare only. This calculator applies exactly that straddle logic — it is why the year-to-date earnings input matters.