US Bonus Tax Calculator

Under the percentage method, 22% federal income tax withholding on supplemental wages up to $1,000,000 in the calendar year, and 37% on the excess. On top of that: Social Security at 6.2% until your wages for the year reach the $184,500 wage base, Medicare at 1.45% with no cap, the 0.9% Additional Medicare Tax once wages pass $200,000, and any state withholding. A $50,000 bonus for someone already on $150,000 of salary in a no-tax state has roughly $13,900 withheld — about 27.7%.

It usually is not taxed at 40% — it is withheld at close to that, and the two are different. The perception comes from stacking four separate withholding streams on the same payment: 22% federal, 6.2% Social Security, 1.45% Medicare and a state rate that can exceed 10% in California or New York. Add them and you are near 40% before a single dollar of actual tax has been computed. What you finally owe is determined on your Form 1040, and any excess withheld comes back as a refund.

Once your supplemental wages for the calendar year exceed $1,000,000, the excess must be withheld at 37% — the top individual rate — and the employer applies it without regard to your Form W-4. The threshold is cumulative across the year and across all supplemental payments from that employer, so a $600,000 bonus in March followed by a $600,000 bonus in November puts $200,000 into the 37% band. Employers have no discretion here; the mandatory rate is set by regulation.

Assuming you are below the Social Security wage base and in a no-income-tax state, roughly $2,965 is withheld: $2,200 federal at 22%, $620 Social Security and $145 Medicare, leaving $7,035. If you are already above the $184,500 wage base, Social Security drops out and about $2,345 is withheld. Add a state supplemental rate and it rises accordingly — around 10% in California takes another $1,000. What you ultimately owe depends on your marginal rate for the year.

It is withheld differently, but taxed identically. A bonus is ordinary income and lands in the same place on your Form 1040 as salary. The only difference is mechanical: because a bonus is a supplemental wage, employers may use the flat percentage method rather than running it through the regular withholding tables. If your marginal rate is 35%, a bonus withheld at 22% leaves you short and you will owe the difference; if your marginal rate is 12%, you are over-withheld and get a refund.

You cannot avoid the tax, but you can change when and how it is paid. Deferring part of the bonus into a 401(k) reduces the federal income tax withheld — though not the Social Security and Medicare, which apply to the gross. A health savings account contribution has the same effect and also reduces FICA when made through payroll. Some employers allow a non-qualified deferred compensation election, but that must be made well before the compensation is earned to satisfy section 409A. Asking for the bonus to be paid in January simply moves the income to a different tax year.

Instead of the flat 22%, the employer adds the bonus to your most recent regular paycheck, calculates withholding on the combined amount using the regular tables, subtracts what was already withheld on the salary, and withholds the difference. This usually produces higher withholding than the flat method for a high earner because the combined figure is annualised. Employers choose the method — you generally cannot demand one — and the flat method is more common precisely because it is simpler to administer.

Often, yes — but it is a refund of over-withholding, not a rebate on the bonus. If your marginal rate is below 22%, the flat method has withheld more than the bonus actually costs you and the excess comes back when you file. If your marginal rate is above 22% — which it is for most people receiving a substantial bonus — the flat method under-withholds and you will owe the difference. Higher earners frequently need to increase withholding elsewhere or make an estimated payment to avoid an underpayment penalty.

Yes, at 6.2%, but only until your total wages for the year reach the Social Security wage base — $184,500 for 2026. A bonus paid late in the year to someone already above the base carries no Social Security at all, which is why the same bonus can have a noticeably different net figure depending on the month it is paid. Medicare has no cap and applies to the full amount, with the extra 0.9% Additional Medicare Tax on wages above $200,000.

That depends on your plan. Many plans apply your standard deferral percentage to bonus payments automatically unless you make a separate election, and some have a distinct bonus deferral election. Deferring reduces the federal income tax withheld because the deferral comes out of taxable pay, but Social Security and Medicare are charged on the gross bonus regardless. Deferring a large bonus is one of the fastest ways to reach the annual elective deferral limit, so check where you are before the payment lands.

The same as any other bonus — as supplemental wages, withheld at 22% federal, or 37% on the part above $1,000,000 of supplemental wages for the year. The complication is clawback. If you leave before the vesting period and repay the bonus, you cannot simply reverse the tax: repayment in a later year is handled through a section 1341 claim of right adjustment, either as a deduction or as a credit, and Social Security and Medicare are recovered separately by the employer. Repayments made in the same calendar year are simpler.

Yes. US citizens and green card holders are taxed on worldwide income, so a bonus paid by a UK employer is fully reportable on Form 1040. No US withholding applies, because a UK employer does not operate US payroll — the bonus is taxed through PAYE at up to 45% plus National Insurance instead. Relief from double taxation comes through the foreign tax credit on Form 1116, or the foreign earned income exclusion where it applies. The tax-year mismatch matters here: a March bonus falls in one UK tax year and one US calendar year that do not align.

It varies enormously. California applies about 10.23% to bonuses and 13.3% to stock options and similar payments; New York is around 11.7%; Texas, Florida, Washington, Nevada, Tennessee, South Dakota, Wyoming and Alaska have no state income tax at all. Several states apply their ordinary withholding tables rather than a supplemental rate. Americans who moved abroad without formally severing state residence can still be assessed by their former state, and no tax treaty protects them from it.

It can raise your marginal rate, but only the income above each threshold is taxed at the higher rate — the bonus does not re-rate your whole salary. The bigger practical risks are threshold effects rather than brackets: crossing $200,000 triggers the 0.9% Additional Medicare Tax on wages and the 3.8% net investment income tax on investment income, and higher income can phase out credits and deductions. A large bonus late in the year is worth modelling against those thresholds rather than against the bracket table alone.

If the flat 22% withholding leaves you materially short and your salary withholding will not make it up, yes. The safe harbour is generally paying 90% of the current year's tax or 100% of last year's — 110% if your prior-year adjusted gross income exceeded $150,000. Because withholding is treated as paid evenly across the year while estimated payments are dated, increasing withholding on later paychecks is often more effective at avoiding an underpayment penalty than making a fourth-quarter estimated payment.