About this calculator
The IRS classifies bonuses as "supplemental wages" and gives employers two withholding methods. This calculator estimates take-home under each so you can predict what hits your account when the bonus drops — and whether you’ll owe more at tax time.
Percentage method (most common)
A flat 22% federal withholding on bonuses up to $1 million, then 37% on the portion above $1M. Add FICA (7.65%) and state. So a $20k bonus typically withholds 22% + 7.65% + ~5% state = ~35%. Net: about $13,000.
Aggregate method (less common)
The bonus is added to your most recent paycheck and withheld at the combined marginal rate. Used by smaller employers and some payroll systems. Often results in higher withholding because the combined paycheck pushes into higher brackets temporarily.
The "bonuses are taxed higher" myth
Your bonus is taxed at exactly the same rate as your regular salary — it just gets withheld at the flat 22%. At tax time, the IRS recalculates everything based on your actual annual income. If you’re in a marginal bracket above 22%, you’ll owe the difference. If you’re below 22%, you’ll get a refund. The total tax is unchanged.
Strategies for big bonuses
- Defer to pre-tax retirement — bump up 401(k) contributions in the month the bonus hits. Many employers let you specify a separate percentage just for bonuses.
- HSA max if not already maxed — fully tax-deductible.
- Donor-advised fund — if you’re charitably inclined, bunching donations into a big bonus year captures larger deductions.
- Plan for the gap — at a 32% marginal bracket with 22% withholding, every $10k of bonus owes another $1k at tax time. Set it aside.