Calculate the estimated net amount of your bonus after taxes.
Estimated Net Bonus
$0.00
Understanding Bonus Taxation
Receiving a bonus can be exciting, but it's important to understand how it's taxed. Bonuses are generally treated as supplemental wages by the IRS and are subject to specific tax withholding rules. This calculator helps you estimate the net amount you'll receive after taxes are deducted from your bonus.
How Bonuses Are Taxed
Bonuses are not taxed like regular salary income because they are considered "supplemental wages." Employers have two primary methods for withholding taxes on bonuses:
Percentage Method: The employer withholds a flat federal tax rate (currently 22%) on the bonus amount, up to a certain limit. If the bonus exceeds $1 million, a higher rate may apply. This method is the most common.
Aggregate Method: The employer combines the bonus with your regular wages for a pay period and calculates withholding based on your W-4 information, as if the bonus were part of your regular pay.
In addition to federal income tax, your bonus is also subject to:
State Income Tax: Varies by state.
Local Income Tax: If applicable in your city or locality.
FICA Taxes: Social Security (6.2%) and Medicare (1.45%) taxes apply to the bonus, up to the Social Security wage base limit.
Marginal vs. Effective Tax Rates
It's crucial to distinguish between your marginal tax rate and your effective tax rate. Your marginal tax rate is the rate applied to your last dollar earned. Bonuses are often taxed at this marginal rate (or the flat 22% supplemental rate, whichever is less burdensome for the employer's calculation initially). Your effective tax rate is your total tax liability divided by your total taxable income. The percentage you enter into the calculator represents your estimated marginal tax rate, which is a good proxy for how much additional tax your bonus might incur, especially if it pushes you into a higher bracket or is taxed under the aggregate method.
Calculator Logic Explained
This calculator simplifies the process by focusing on the primary income tax impact. It uses the following logic:
Input: You provide the gross bonus amount, your annual income (before the bonus), and your estimated marginal tax bracket percentage.
Tax Calculation: The calculator applies your marginal tax bracket percentage directly to the gross bonus amount to estimate the federal income tax withholding. We've excluded FICA and state/local taxes for simplicity, as these vary widely and depend on specific jurisdictions.
Net Bonus: The estimated federal tax is subtracted from the gross bonus to show the approximate net amount you might receive.
Note: This is an estimation. Actual withholding may vary based on your employer's specific payroll practices, your W-4 details, and state/local tax laws. For precise figures, consult your HR department or a tax professional.
function calculateBonusTax() {
var bonusAmount = parseFloat(document.getElementById("bonusAmount").value);
var annualIncome = parseFloat(document.getElementById("annualIncome").value);
var taxBracket = parseFloat(document.getElementById("taxBracket").value);
var netBonus = 0;
var errorMessage = "";
if (isNaN(bonusAmount) || bonusAmount <= 0) {
errorMessage = "Please enter a valid gross bonus amount greater than zero.";
} else if (isNaN(annualIncome) || annualIncome < 0) {
errorMessage = "Please enter a valid annual income.";
} else if (isNaN(taxBracket) || taxBracket 100) {
errorMessage = "Please enter a valid tax bracket percentage between 0 and 100.";
} else {
// Simplified calculation: Apply marginal tax bracket directly.
// In reality, the 22% federal withholding for supplemental wages might apply first,
// or the aggregate method could be used. This is a common estimation approach.
var federalTax = bonusAmount * (taxBracket / 100);
netBonus = bonusAmount – federalTax;
// Ensure net bonus isn't negative due to rounding or very high brackets
if (netBonus < 0) {
netBonus = 0;
}
}
if (errorMessage) {
document.getElementById("result-value").innerHTML = "Error";
alert(errorMessage); // Use alert for immediate feedback on errors
} else {
document.getElementById("result-value").innerHTML = "$" + netBonus.toFixed(2);
}
}