Find out exactly how much of your bonus you’ll actually take home. Compare the flat 22% federal supplemental withholding rate against the aggregate method — and see which one means more money in your pocket.
🎁 Your bonus & salary
⚙️ Withholding method
Aggregate: Employer adds the bonus to your regular paycheck, calculates tax on the combined amount, then subtracts your normal withholding. Can result in more or less withheld depending on your bracket.
⚖️ Flat rate vs. aggregate method
Note: Both methods are just withholding estimates — your actual tax liability is settled when you file your return. If too much is withheld, you get a refund. If too little, you owe the difference.
📊 Where your bonus goes
📋 Detailed breakdown
| Item | Amount |
|---|
Federal withholding uses the IRS 2025 supplemental wage rates: 22% flat on bonuses up to $1,000,000; 37% on amounts above. The aggregate method uses 2025 tax brackets and standard deduction. FICA (Social Security + Medicare) applies to bonus income. Actual tax owed is determined when you file your return — withholding is an estimate only.
How to use the Bonus Tax Calculator
Wondering how much of your bonus you’ll actually take home? This calculator shows your exact after-tax bonus amount using both IRS-approved withholding methods — and tells you which one results in more money in your pocket.
- Enter your bonus amount. This is the gross bonus before any taxes are taken out — the number your employer announced or that appears on your offer letter.
- Enter your annual base salary. This is needed to calculate the aggregate method withholding, which combines your bonus with your regular paycheck to determine the appropriate tax rate.
- Select your filing status and pay frequency. These affect how the aggregate method calculates your withholding. Choose bi-weekly if you’re paid every two weeks, semi-monthly if paid twice per month.
- Enter your state tax rate and any 401(k) withholding. Some employers withhold 401(k) contributions from bonus checks — enter the percentage if applicable.
- Choose a calculation mode and click Calculate. Select “Compare both” to see the flat rate versus aggregate method side by side, or select one method specifically if you know which your employer uses.
How bonuses are taxed
Bonuses are classified as “supplemental wages” by the IRS, which means they’re subject to different withholding rules than your regular paycheck. There are two IRS-approved methods for withholding federal income tax on bonuses, and your employer chooses which one to use.
The flat rate (percentage) method
The most common method is the flat 22% federal withholding rate on supplemental wages up to $1,000,000. This applies regardless of your income or tax bracket. If your bonus exceeds $1,000,000 in a calendar year, the amount above $1 million is withheld at 37%. The flat rate method is simple and predictable — but it may over-withhold or under-withhold depending on your actual marginal tax bracket.
The aggregate method
With the aggregate method, your employer adds the bonus to your most recent regular paycheck, calculates withholding on the combined amount as if you earned that total every pay period, and then subtracts what was already withheld from your regular paycheck. The result can be higher or lower than the flat rate, depending on your income and filing status. If you’re in the 12% bracket, the aggregate method typically withholds less than 22%. If you’re in the 32% bracket, it may withhold more.
Federal supplemental wage withholding rates (2025)
| Supplemental wage amount | Federal withholding rate |
|---|---|
| Up to $1,000,000 | 22% (flat rate method) |
| Over $1,000,000 | 37% on the amount above $1M |
| Any amount (aggregate method) | Based on your marginal bracket |
Other taxes on your bonus
Federal income tax withholding is just one piece. Your bonus is also subject to:
- Social Security tax (6.2%): Applied to bonus amounts up to the annual Social Security wage base ($176,100 in 2025). If you’ve already earned more than this from your regular salary, no Social Security tax is withheld from the bonus.
- Medicare tax (1.45%): Applied to all bonus income with no wage cap. High earners above $200,000 (single) or $250,000 (MFJ) also owe the 0.9% Additional Medicare Tax.
- State income tax: Most states tax bonus income at the same rate as regular income. Some states have their own supplemental wage rates — check your state’s revenue department for specifics.
Frequently asked questions
Why was 40% taken out of my bonus?
When you add up all the taxes on a bonus — 22% federal flat rate, 6.2% Social Security, 1.45% Medicare, and state income tax — it’s common to see 30–45% withheld total. If you’re in a high-tax state like California or New York, the total withholding can approach 45–50%. Remember, this is withholding — not necessarily your final tax bill. If your actual marginal rate is lower than the withholding rate, you’ll receive the excess back as a refund when you file.
Can I ask my employer to withhold less from my bonus?
Generally, no — employers are required by the IRS to use either the flat rate or aggregate method for supplemental wages. You cannot instruct your employer to withhold less than the required amounts. However, if you believe you’ll be over-withheld, you can adjust your regular W-4 to reduce withholding on your normal paychecks to compensate, effectively balancing out over the course of the year.
Should I put my bonus in my 401(k) to avoid taxes?
Contributing a portion of your bonus to a traditional 401(k) — if your employer allows it — is one of the most tax-efficient moves available. Every dollar contributed reduces your federal and state taxable income for the year. If you haven’t maxed out your $23,500 annual contribution limit, directing bonus money to a 401(k) saves you taxes at your marginal rate. The effective cost of a $5,000 contribution is only $3,900 if you’re in the 22% bracket.
Is a signing bonus taxed differently than a regular bonus?
No — a signing bonus is treated as supplemental wages just like a regular performance bonus. The same 22% flat rate (or aggregate method) applies for federal withholding, plus FICA taxes and state income tax. One thing to watch out for: many signing bonuses come with a clawback provision requiring you to repay the bonus if you leave within a certain period. If you repay a bonus in a later tax year, you may be able to claim a deduction or tax credit for the repayment.
What if my bonus pushes me into a higher tax bracket?
Only the portion of your bonus that exceeds the bracket threshold is taxed at the higher rate — not the entire bonus. For example, if your taxable income is $45,000 and your bonus is $10,000, only the $6,525 above the 12% bracket threshold ($48,475 for single filers in 2025) would be taxed at 22%. The rest is still taxed at 12%. Use the Tax Bracket Calculator to see exactly how your bonus affects your bracket.
Are bonuses subject to Social Security tax?
Yes, bonuses are subject to Social Security tax at 6.2%, but only up to the annual wage base limit of $176,100 in 2025. If your regular salary already exceeds $176,100, no Social Security tax will be withheld from your bonus. If your regular salary plus bonus combined exceed $176,100, Social Security tax is withheld only on the amount up to the limit.
Strategies to keep more of your bonus
- Contribute to your 401(k). If you haven’t reached the $23,500 annual limit, increasing your 401(k) contribution rate before your bonus is paid reduces your taxable income dollar-for-dollar.
- Contribute to an HSA. If you have a high-deductible health plan, HSA contributions are pre-tax. The 2025 limits are $4,300 for self-only coverage and $8,550 for family coverage.
- Time charitable donations. If you’re planning to make significant charitable donations anyway, doing so in the same year as a large bonus increases the tax benefit of those donations.
- Understand the withholding vs. liability distinction. High withholding on a bonus isn’t necessarily a problem if your overall tax liability is lower — you’ll get the excess back as a refund. Focus on your annual tax picture, not just the bonus paycheck.
- Review your W-4 after receiving a large bonus. A large bonus can change your year-to-date withholding picture significantly. If the bonus was heavily withheld, you may want to temporarily reduce W-4 withholding to balance out.