Explain it like I’m 5
When you get a bonus, your boss has to send some of it to the government before paying you — like a lemonade stand that sets aside part of each sale for tax.
To keep it simple, bosses often set aside a flat 22 cents of every dollar for income tax, plus about 7.65 cents for Social Security and Medicare.
But that 22 cents is only a guess. When you do your taxes in spring, the real amount is worked out. If too much was set aside, you get the extra back. If too little, you pay a bit more.
Words you’ll see, in plain English
- Bonus (supplemental wages)
- Extra pay on top of your regular wages, like a year-end or signing bonus. It’s taxed as normal income, but employers often withhold a flat 22% for federal tax.
- Withholding
- Tax your employer takes out of each paycheck and sends to the government for you. It’s an estimate — when you file your tax return, you get back anything extra or pay what’s missing.
- FICA (Social Security and Medicare tax)
- Payroll taxes on your wages: 6.2% for Social Security (up to a yearly limit) and 1.45% for Medicare. Your employer pays the same amount again on top.
- Take-home pay (net pay)
- The money that actually lands in your bank account after taxes and other deductions come out of your paycheck. It’s always smaller than your gross pay.
- Tax bracket (marginal rate)
- Income is taxed in layers. Each layer has its own rate, and your bracket is the rate on your top layer — not on all your money.
More money words explained simply in our glossary.
How to use the bonus tax calculator
- Enter your bonus before any tax.
- Enter your other pay for the year and your filing status — this decides your real tax bracket.
- Add your state’s bonus withholding rate, if any, and any share going to your 401(k).
- Compare what’s withheld with what you actually owe.
How bonuses are taxed
Federal withholding = bonus × 22%
Social Security = bonus × 6.2% (until your pay reaches $184,500 for 2026)
Medicare = bonus × 1.45% (+ 0.9% on pay over $200,000)
Example: a $10,000 bonus on an $80,000 salary, single, no state tax.
- Federal withholding: $10,000 × 22% = $2,200.
- Social Security: $620. Medicare: $145.
- Take-home: $7,035.
- Real federal tax on the bonus: $2,200 — the bonus falls in the 22% bracket, so withholding matches.
But on a $250,000 salary, a $20,000 bonus is taxed at 32% while only 22% is withheld — expect to owe about $2,000 more when you file.
Bonus take-home table
$80,000 salary, single, 22% federal withholding, no state tax or 401(k).
| Bonus | Withheld | Take-home |
|---|---|---|
| $1,000 | $297 | $704 |
| $2,500 | $741 | $1,759 |
| $5,000 | $1,483 | $3,518 |
| $10,000 | $2,965 | $7,035 |
| $25,000 | $7,413 | $17,588 |
| $50,000 | $14,825 | $35,175 |
Percentage vs. aggregate method
- Percentage (flat) method: the bonus is paid separately and 22% is withheld. Simple and predictable.
- Aggregate method: the bonus is added to a regular paycheck and withheld as if you earned that much every pay period, which often withholds more.
Either way, your actual tax is settled on your tax return. Learn more in how bonuses are taxed.
Common mistakes
- Thinking a bonus pushes all your income into a higher bracket. Only the dollars above each bracket line are taxed at the higher rate.
- Spending the whole check when you’re in a high bracket. At 24% or more, 22% withholding falls short.
- Forgetting state tax — many states withhold a flat rate on bonuses too.
Learn more
- How Are Bonuses Taxed? — Bonuses are taxed like regular pay, but withheld differently: usually a flat 22% for federal income tax, plus 7.65% for Social Security and Medicare. Whether that’s too much or too little depends on your tax bracket.
Frequently asked questions
How much tax is taken out of a bonus?
Usually a flat 22% for federal income tax, plus 6.2% Social Security and 1.45% Medicare, plus any state tax. On a $10,000 bonus with no state tax, that’s about $2,965 withheld, leaving about $7,035.
Why are bonuses taxed so high?
They aren’t taxed at a special higher rate — bonuses are ordinary income. They often feel over-taxed because of withholding: employers can withhold a flat 22%, or add the bonus to a regular paycheck and withhold as if you earned that much every period, which can take out much more. Any extra comes back when you file your tax return.
Will I get bonus tax back?
Possibly. If your real top tax bracket is below 22%, more was withheld than you owe and you’ll get it back as part of your refund. For example, someone earning $35,000 (single) with a $5,000 bonus would likely get about $500 back. If you’re in the 24% bracket or higher, 22% isn’t enough and you may owe a little.
What is the bonus tax rate for 2026?
The federal flat withholding rate for supplemental wages like bonuses is 22%, rising to a mandatory 37% on supplemental wages above $1 million in a year. The tax you actually owe depends on your total income and bracket.
Can I avoid tax on my bonus?
You can reduce it legally: if your plan allows, put part of the bonus into a traditional 401(k), which lowers income tax (but not Social Security and Medicare). An HSA contribution through payroll can also help.
These results are estimates for education only, based on the assumptions you enter. They are not financial, investment or tax advice. Real returns, rates and taxes vary. See our methodology anddisclaimer.