Comprehensive Guide
Learn more in our Personal Finance Guide.
How it works
A bonus take-home estimate starts from a quirk of American payroll: the IRS lets employers withhold on supplemental wages — bonuses among them — at a flat 22% federal rate instead of running the payment through your normal withholding certificate. Add FICA at 7.65% and whatever your state charges, and the check that arrives looks dramatically thinner than the offer letter promised: a $5,000 bonus with 5% state tax nets about $3,268, keeping just over sixty-five cents per dollar. The flat rate is withholding, not final tax. At filing the bonus simply stacks onto annual income; if your true marginal bracket sits below 22%, part of the withholding returns as refund, and if it sits above, you owe the difference in April. The calculator also handles one expensive edge case: once year-to-date wages cross the Social Security wage base, the 6.2% portion stops applying to further earnings, so late-year bonuses escape about $310 per $5,000 that an identical January bonus would have paid. Two caveats keep estimates honest — employers using the aggregate method may withhold differently, and signing bonuses sometimes carry clawback terms that change the math entirely. Treat the output as a planning figure within a few percentage points, not a payroll quote.Formula
Take-home = bonus × (1 − federal supplemental% − FICA% − state%), where FICA = 6.2% + 1.45%, or just 1.45% past the wage base
Tips
- The 22% is withholding only — your real tax settles when you file, up or down.
- Late-year bonuses can skip the 6.2% Social Security slice if YTD pay passed the cap.
- Redirect the net immediately — bonuses parked in checking rarely survive the season.
- Ask whether a signing bonus is repayable if you leave early before spending it.
- If your bracket exceeds 22%, pre-fund the April gap rather than meeting it cold.
Frequently asked questions
Why is my bonus taxed so much more than my salary?
It usually is not taxed more overall — payroll applies the flat 22% federal supplemental rate plus 7.65% FICA and state tax all at once, which feels brutal next to gradual paycheck withholding. At filing the bonus blends into annual income, so over-withholding often returns inside your refund.
How much do you take home from a $5,000 bonus?
Withholding runs $1,100 federal (22%), $382.50 FICA and about $250 at a 5% state rate, leaving roughly $3,268 — about 65% of gross. Your true outcome depends on marginal bracket: below 22% some comes back at filing; above it, expect to owe a little more.
What is the federal supplemental withholding rate?
22% on supplemental wages up to $1 million paid during the calendar year, jumping to 37% on amounts above that threshold. Employers may alternatively use the aggregate method — adding the bonus to a regular check — but the flat percentage is by far the most common for bonuses.
Will I get bonus taxes back on my tax return?
Partly, if withholding overshot your true liability. A worker whose actual marginal bracket is 12% effectively prepaid ten points on the whole bonus — worth around $500 on $5,000 at filing time. Brackets above 22% work in reverse, so plan for a small balance due instead.
Are signing bonuses taxed differently than performance bonuses?
Not at withholding level — both are supplemental wages facing the same 22% flat federal treatment plus FICA and state. The difference is contractual: signing bonuses frequently carry repayment clauses if you depart within a year or two, which no amount of tax planning offsets once the money is spent.