Receiving a bonus payment can be a great financial boost, but it's important to understand how it's taxed. In the United States, 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 withheld.
How Bonuses Are Taxed
Bonuses are considered ordinary income and are subject to federal income tax, state income tax (if applicable), Social Security tax, and Medicare tax. The way taxes are withheld for bonuses differs slightly from your regular paycheck, primarily due to IRS regulations on supplemental wages.
There are two common methods employers use to withhold taxes on supplemental wages like bonuses:
Percentage Method: Your employer withholds a flat rate of 22% for federal income tax on supplemental wages up to $1 million. Any amount exceeding $1 million is taxed at 37%. This is the most common method.
Aggregate Method: Your employer combines the bonus with your regular wages and then calculates the tax withholding based on the total amount and your W-4 information. This method can result in higher withholding if the bonus pushes your income into a higher tax bracket for that pay period.
For simplicity, this calculator primarily focuses on the federal income tax withholding using the common 22% flat rate for supplemental wages, alongside estimates for FICA taxes (Social Security and Medicare). It also includes a placeholder for state income tax, which varies significantly by location.
The Calculation
The estimated net bonus is calculated as follows:
Gross Bonus: The total amount of the bonus payment.
Federal Withholding Tax: Typically, 22% of the gross bonus (for amounts up to $1 million).
Social Security Tax: 6.2% of the gross bonus (up to the annual wage base limit, which is $168,600 for 2024).
Medicare Tax: 1.45% of the gross bonus (no wage base limit).
State Income Tax: This varies by state. Many states tax bonuses as ordinary income, similar to federal withholding. We've used a user-provided estimated marginal rate for this.
Total Estimated Taxes = Federal Withholding + Social Security + Medicare + State Income Tax
Net Bonus = Gross Bonus – Total Estimated Taxes
Note: The "Estimated Marginal Tax Rate" input allows you to factor in your specific state and potentially higher federal brackets if your annual salary is substantial. For example, if you are in a 22% federal bracket and a 5% state bracket, your total marginal rate might be around 27%. This calculator applies this rate as a percentage of the bonus.
Why Use This Calculator?
Planning: Understand how much you'll actually receive to make better financial decisions.
Transparency: Demystify the tax withholding process for supplemental income.
Budgeting: Accurately budget your expected net bonus amount.
Disclaimer: This calculator provides an estimate based on common tax withholding practices. Actual tax withholding may vary depending on your employer's specific payroll system, your individual tax situation (e.g., W-4 elections, other income), and changes in tax laws. It does not constitute tax advice. Consult with a qualified tax professional for personalized advice.
function calculateBonusTax() {
var bonusAmountInput = document.getElementById("bonusAmount");
var annualSalaryInput = document.getElementById("annualSalary");
var taxRateInput = document.getElementById("taxRate");
var netBonusAmountDisplay = document.getElementById("netBonusAmount");
var errorMessageDisplay = document.getElementById("errorMessage");
// Clear previous error messages
errorMessageDisplay.textContent = "";
// Get input values
var bonusAmount = parseFloat(bonusAmountInput.value);
var annualSalary = parseFloat(annualSalaryInput.value); // Used to contextualize, but not directly in this simplified calc
var taxRatePercent = parseFloat(taxRateInput.value);
// — Input Validation —
if (isNaN(bonusAmount) || bonusAmount <= 0) {
errorMessageDisplay.textContent = "Please enter a valid positive bonus amount.";
netBonusAmountDisplay.textContent = "$0.00";
return;
}
if (isNaN(annualSalary) || annualSalary < 0) {
errorMessageDisplay.textContent = "Please enter a valid annual salary.";
netBonusAmountDisplay.textContent = "$0.00";
return;
}
if (isNaN(taxRatePercent) || taxRatePercent 100) {
errorMessageDisplay.textContent = "Please enter a valid tax rate between 0% and 100%.";
netBonusAmountDisplay.textContent = "$0.00";
return;
}
// — Tax Calculations —
// Standard federal withholding rate for supplemental wages (up to $1M)
var federalWithholdingRate = 0.22;
var socialSecurityRate = 0.062; // 6.2%
var medicareRate = 0.0145; // 1.45%
// Calculate federal withholding
var federalTax = bonusAmount * federalWithholdingRate;
// Calculate FICA taxes (Social Security and Medicare)
// Note: For simplicity, we are not implementing the Social Security wage base limit here,
// as a single bonus is unlikely to cause an individual to exceed it unless they already have
// very high earnings and the bonus is also very large. For precise calculations, this limit
// would need to be checked against total year-to-date earnings.
var socialSecurityTax = bonusAmount * socialSecurityRate;
var medicareTax = bonusAmount * medicareRate;
// Calculate estimated state tax using the provided marginal rate
var stateTaxRate = taxRatePercent / 100;
var stateTax = bonusAmount * stateTaxRate;
// Calculate total estimated taxes
var totalTaxes = federalTax + socialSecurityTax + medicareTax + stateTax;
// Ensure total taxes do not exceed the bonus amount
if (totalTaxes > bonusAmount) {
totalTaxes = bonusAmount;
}
// Calculate net bonus amount
var netBonus = bonusAmount – totalTaxes;
// Display the result, formatted as currency
netBonusAmountDisplay.textContent = "$" + netBonus.toFixed(2);
}