Why is my bonus taxed so much? See what you will actually take home.
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The IRS treats bonuses as supplemental wages. Most employers withhold a flat 22% federal income tax (37% on supplemental pay over $1 million in a year), plus 6.2% Social Security and 1.45% Medicare, plus state tax.
Withholding is only a prepayment. If your real tax bracket is 12%, the extra 10% comes back as a refund when you file; in the 24%+ brackets you may owe a bit more. Putting part of the bonus into your 401(k) reduces the income tax.
| Bonus amount | 10,000 $ |
| Withholding method | Flat 22% (most employers) |
| Wages so far this year | 60,000 $ |
| State withholding rate | 5% |
| 401(k) % taken from bonus | 0% |
| Annual salary (aggregate method) | 60,000 $ |
| Paychecks a year (aggregate) | Every 2 weeks (26) |
| Filing status | Single |
| Bonus after tax | $6,535.00 |
| Federal withholding | $2,200.00 (22% flat) |
| Social Security (6.2%) | $620.00 |
| Medicare (1.45%+) | $145.00 |
| State withholding | $500.00 |
| You keep | 65.4% of the bonus |
$6,535.00.
| Bonus amount | 5,000 $ |
| Withholding method | Flat 22% (most employers) |
| Wages so far this year | 60,000 $ |
| State withholding rate | 0% |
| 401(k) % taken from bonus | 0% |
| Annual salary (aggregate method) | 60,000 $ |
| Paychecks a year (aggregate) | Every 2 weeks (26) |
| Filing status | Single |
| Bonus after tax | $3,517.50 |
| Federal withholding | $1,100.00 (22% flat) |
| Social Security (6.2%) | $310.00 |
| Medicare (1.45%+) | $72.50 |
| State withholding | $0.00 |
| You keep | 70.4% of the bonus |
$3,517.50.
Usually 22% federal + 7.65% FICA + state tax, so about 30–40% in total is withheld.
No. The withholding method differs, but bonuses are taxed at the same rates as other wages when you file your return.
Put some of it into a 401(k) or HSA through payroll if your plan allows, which lowers taxable income.
Supplemental wages over $1 million in a calendar year must have 37% federal tax withheld.