Bonus Pay Tax Calculator
Calculate federal withholding on bonuses: 22% flat rate or aggregate method for Head of Household
2025 Bonus Withholding Methods
Flat Rate Method
22%
Most common. Employer withholds flat 22% federal income tax on bonuses up to $1 million. Simple and predictable.
Aggregate Method
Varies
Combines bonus with regular paycheck, calculates withholding as if it's your normal pay. Can result in higher or lower withholding.
Important:
These are WITHHOLDING methods, not tax rates. Your actual tax is calculated when you file your return. If too much withheld, you get refund. If too little, you owe.
Flat Rate Method: 22% Examples
Most employers use this method because it's simple. Flat 22% federal withholding on the bonus amount (plus FICA taxes).
Example 1: $5,000 Bonus
• Gross bonus: $5,000
Withholding:
• Federal income tax: $5,000 × 22% = $1,100
• Social Security: $5,000 × 6.2% = $310
• Medicare: $5,000 × 1.45% = $73
• State tax (varies): ~$250 (assume 5%)
• Total withholding: $1,733
Net bonus take-home: $3,267 (65%)
Example 2: $10,000 Bonus
• Gross bonus: $10,000
Withholding:
• Federal income tax: $10,000 × 22% = $2,200
• Social Security: $10,000 × 6.2% = $620
• Medicare: $10,000 × 1.45% = $145
• State tax: ~$500
• Total withholding: $3,465
Net bonus take-home: $6,535 (65%)
Example 3: $25,000 Bonus
• Gross bonus: $25,000
Withholding:
• Federal income tax: $25,000 × 22% = $5,500
• Social Security: $25,000 × 6.2% = $1,550
• Medicare: $25,000 × 1.45% = $363
• State tax: ~$1,250
• Total withholding: $8,663
Net bonus take-home: $16,337 (65%)
Quick Rule of Thumb:
Expect to take home about 60-65% of your bonus after all taxes. A $10,000 bonus becomes ~$6,500 net. Plan accordingly!
Over $1 Million: 37% Rate
For supplemental wages over $1 million in a year, federal withholding jumps to 37% on the excess.
Example: $1.2 Million Bonus
Executive receiving large bonus:
• Bonus: $1,200,000
• First $1 million: $1,000,000 × 22% = $220,000
• Excess over $1M: $200,000 × 37% = $74,000
• Social Security: $176,100 × 6.2% = $10,918 (capped)
• Medicare: $1,200,000 × 1.45% = $17,400
• Additional Medicare: ($1.2M - $200k) × 0.9% = $9,000
• Total federal withholding: $331,318
Net bonus: $868,682 (72%)
Plus state tax could be another $60k+
Aggregate Method: Combined with Regular Pay
Employer adds bonus to your regular paycheck and calculates withholding as if combined amount is your normal pay for the period, then subtracts what would have been withheld without bonus.
When Aggregate Method Better
Scenario: Lower earner gets bonus
• Regular semi-monthly pay: $2,000 ($48k annual)
• Bonus: $3,000
• Combined paycheck: $5,000
Flat Rate Method:
• Bonus withholding: $3,000 × 22% = $660
Aggregate Method:
• Annualized pay: $5,000 × 24 = $120,000
• HOH withholding on $120k: ~$16,500 annually
• Per paycheck: $16,500 ÷ 24 = $688
• Without bonus: $48k → ~$300 per paycheck
• Extra withholding: $688 - $300 = $388
Aggregate method withholds $388 vs $660 flat rate. Save $272 in withholding!
Actual tax likely lower than 22% for $48k earner
When Flat Rate Better
Scenario: High earner gets bonus
• Regular semi-monthly pay: $8,333 ($200k annual)
• Bonus: $20,000
• Combined: $28,333
Flat Rate Method:
• Bonus withholding: $20,000 × 22% = $4,400
Aggregate Method:
• Annualized: $28,333 × 24 = $680,000
• HOH withholding on $680k: ~$195,000 annually
• This paycheck: $195k ÷ 24 = $8,125
• Normal paycheck: $200k → $5,000 withholding per check
• Extra withholding: $8,125 - $5,000 = $3,125
Oops! Aggregate withholds much less ($3,125 vs $4,400). May owe at tax time.
Why This Happens:
Aggregate method annualizes the combined paycheck, but bonuses are one-time. For high earners already in top brackets, annualizing artificially lowers effective withholding. 22% flat rate is more accurate for them.
Actual Tax vs Withholding
Remember: 22% withholding doesn't mean 22% tax. Your actual tax depends on your total income for the year and filing status.
Scenario: Under-withheld (Get Refund)
HOH earning $50,000 salary + $10,000 bonus:
• Bonus withholding (22%): $2,200
• Actual tax bracket: 12%
• Actual tax on bonus: $10,000 × 12% = $1,200
Refund: $1,000 (withheld $2,200 but owe $1,200)
This is common for lower-income earners. 22% flat rate over-withholds.
Scenario: Match (Break Even)
HOH earning $80,000 salary + $15,000 bonus:
• Bonus withholding (22%): $3,300
• Actual marginal rate: 22%
• Actual tax on bonus: $15,000 × 22% = $3,300
Perfect match! No refund, no owed.
Scenario: Under-withheld (Owe at Filing)
HOH earning $200,000 salary + $50,000 bonus:
• Bonus withholding (22%): $11,000
• Actual marginal rate: 35% (income $200k-$250k)
• Actual tax on bonus: $50,000 × 35% = $17,500
Owe: $6,500 (withheld $11k but owe $17.5k)
High earners often under-withheld on bonuses. Consider extra withholding or estimated payments.
Additional Taxes on Bonuses
Social Security Tax (6.2%)
Applied to bonuses until you hit $176,100 wage base for the year. If you've already maxed out SS tax from regular wages, bonus is exempt.
Example: Earn $180k salary, receive $20k December bonus. Already hit $176,100 cap, so no SS tax on bonus (save $1,240).
Medicare Tax (1.45% + 0.9%)
Always applies (no cap). Plus Additional Medicare Tax (0.9%) once you exceed $200,000 for HOH.
Example: Earn $190k salary, $20k bonus. Total $210k exceeds $200k threshold. Pay extra 0.9% on $10k = $90 additional.
State Income Tax
Most states tax bonuses same as regular income (flat rate or graduated brackets). A few states (TX, FL, WA, NV, etc.) have no income tax.
💡 Bonus Tax Planning Strategies
1. Increase W-4 Withholding
If high earner, 22% withholding likely too low. Add extra withholding on W-4 Line 4(c) to avoid owing at tax time.
2. Time Bonus for Tax Planning
Defer bonus to next year if you'll be in lower tax bracket (career change, retirement). Or accelerate if expect higher bracket next year.
3. Max Out 401(k) with Bonus
Contribute bonus to 401(k) ($23,000 limit for 2024). Reduces taxable income AND lowers Medicare/SS tax. Win-win!
4. Check Social Security Cap
If close to $176,100 wage base, time bonus for after you hit cap. Save 6.2% ($620 per $10k bonus).
5. Make Estimated Tax Payment
If bonus puts you significantly over previous year's tax, make Q4 estimated payment to avoid underpayment penalty.
6. Review W-4 After Bonus
Got big bonus early in year? Adjust W-4 to spread extra withholding over remaining paychecks instead of one big hit at filing.