A bonus feels like great news until payday, when the check lands about thirty percent smaller than the number on your offer letter. Most people never planned for the tax hit. This bonus tax calculator from Smekys breaks the gross bonus into every tax line the IRS forces your employer to take out — federal withholding, FICA (Social Security and Medicare), and optional state tax — so you see the real after-tax bonus before it hits your bank account.
It is built around the US supplemental wage rules in IRS Publication 15: a flat 22% federal withholding on bonuses up to $1 million in a calendar year, jumping to 37% on anything above that threshold, plus a flat 7.65% FICA levy. Adjust the sliders and the result card updates instantly.
How to Use
- Enter the Gross Bonus Amount — the total dollar figure your company promised, before any deductions. This is the number on your bonus letter, not the number you expect to receive.
- Set Other Supplemental Pay This Year. If you already received a bonus, commission, or exercised restricted stock earlier this year, enter that cumulative total here. It decides how much of this bonus sits under the $1 million threshold and how much is pushed into the 37% bracket. Leave it at 0 if this is your only supplemental payment all year.
- Set the State Tax Withholding rate. Enter your approximate state income tax percentage on wages. If you live in one of the states with no broad wage income tax — Texas, Florida, Washington, Nevada, Wyoming, South Dakota, or Alaska — leave this at 0.
- Read the result card from top to bottom: Gross Bonus is what was promised, Federal Tax Withheld is the 22%/37% amount sent to the IRS, FICA Withheld is the 7.65% for Social Security and Medicare, State Tax Withheld covers your state, and Net Bonus (Take-Home) is what actually lands in your account. The card also shows the total tax taken out and your blended effective tax rate on the bonus.
The key control most other calculators leave out is the second one: because the 22% vs 37% split depends on your cumulative supplemental wages for the whole year, a senior engineer who already banked a $900,000 RSU vest earlier this year will see the next $100,000 of a bonus taxed at 22% but every dollar after that at 37%.
How Bonuses Are Taxed in the US
The rule everyone gets wrong is that a bonus is not added to your next paycheck and taxed at your normal withholding tables. Under IRS rules, bonuses are supplemental wages, and employers may withhold federal income tax using the optional flat percentage method:
- 22% flat on supplemental wages up to $1 million paid to you in a calendar year.
- 37% flat on any portion of supplemental wages above $1 million in the same year.
On top of federal income tax, every bonus — no matter the size — is also subject to FICA, the combined payroll tax of 7.65%: 6.2% for Social Security (up to an annual wage base that resets each year) plus 1.45% for Medicare with no cap. State income tax is withheld at your employer's default rate unless you file extra exemptions.
That is why a $10,000 bonus does not arrive as $10,000. On a typical day with no state tax, $2,200 goes to federal withholding and $765 goes to FICA, leaving about $7,035 in your pocket — an effective tax bite of roughly 29.65%, before any state withholding.
Crucially, the 22% and 37% are only withholding rates, not your final tax bill. When you file your 1040 the following April, the bonus is folded into your total income and taxed at your real marginal bracket. If your true bracket is below 22%, you may get part of that withholding back as a refund; if it is above, you may owe a little extra. People who live in high-tax states and earn high incomes are often surprised to find their bonus withholding under-collects, which is why this calculator separates federal, FICA, and state lines so you can plan for the April bill.
Why the $1 Million Threshold Matters
The 37% flat rate is not a "rich tax" — it is a withholding shortcut for supplemental pay above $1 million. Once your cumulative supplemental wages for the year cross $1,000,000, the IRS tells employers to stop using the 22% default and withhold at the maximum individual rate of 37% on the excess. This is why executives frequently describe their final bonus check as "taxed at almost half."
Worked example: an executive has already received $900,000 of RSU vesting this year, and now gets a $1,200,000 cash bonus. Only the first $100,000 of that bonus still fits under the remaining headroom to $1,000,000, so it is withheld at 22% ($22,000). The remaining $1,100,000 crosses the cap and is withheld at 37% ($407,000). FICA adds another $91,800. Total federal-plus-FICA withholding is $520,800, leaving a net bonus of $679,200 — an effective rate of 43.4% before state tax.
Examples
Example 1 — A standard $10,000 year-end bonus. Single employee, no prior supplemental pay this year, lives in Texas (no state income tax). Federal withholding is $10,000 × 22% = $2,200. FICA is $10,000 × 7.65% = $765. State tax is $0. Total tax withheld is $2,965, and the net bonus take-home is $7,035 — an effective tax rate of 29.65%.
Example 2 — A $5,000 bonus in a 5% state. Same employee lives in a state with a 5% flat income tax. Federal stays $1,100, FICA stays $382.50, but state withholding adds $250. Total tax is $1,732.50, so the net bonus is $3,267.50 — a 34.65% effective rate. The same $5,000 bonus is worth roughly $232.50 less just by living in a tax state.
Example 3 — A large executive bonus crossing $1M. Already-banked supplemental pay is $900,000; the new bonus is $1,200,000; no state tax. The first $100,000 is taxed at 22% and the remaining $1,100,000 at 37%, for a combined federal figure of $429,000. FICA on the full bonus is $91,800. Total withheld is $520,800 and net take-home is $679,200. If you are expecting a bonus this size, set the "Other Supplemental Pay This Year" field honestly, or you will wildly overestimate your net check.
FAQ
How much will I actually take home from my bonus?
For most people, take-home is about 65–75% of the gross bonus. A $10,000 bonus with no state tax nets roughly $7,035 after 22% federal withholding and 7.65% FICA. Add a 5% state tax and the net drops to around $6,535 on that same bonus. Bonuses above $1 million in a single year net much less because the excess is withheld at 37%.
Why is my bonus taxed at such a high rate?
Employers do not tax your bonus using your normal paycheck withholding tables. They apply the IRS optional flat supplemental wage rate: 22% on bonuses up to $1 million, and 37% on anything above that. On top of that, 7.65% FICA is withheld. The combined rate looks heavy, but it is withholding, not your final tax — you true up when you file.
Do I get bonus tax back at the end of the year?
Sometimes. The 22% flat withholding is a one-size-fits-all estimate. If your actual marginal tax bracket is below 22%, the IRS may refund part of the withholding when you file your 1040. If your real bracket is higher — common for six-figure earners who also have state tax — you may owe additional tax in April. This calculator shows the split so you can set aside the expected balance.
Does FICA apply to my bonus?
Yes. Every wage and most bonus payments are subject to the 7.65% FICA tax: 6.2% Social Security on wages up to the annual wage base plus 1.45% Medicare with no cap. This is on top of federal income tax withholding, which is why a bonus never nets at a clean 78%.
Which states tax bonuses and which do not?
Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming do not tax wage income. New Hampshire and Tennessee tax only interest and dividends. Every other state with an income tax will withhold on your bonus at your employer's default rate; set your approximate state percentage in the calculator to include it.
Should I ask my employer to split my bonus across two years?
It can help in narrow cases. Spacing a bonus so each calendar year stays below the $1 million supplemental threshold keeps the 37% rate from kicking in, and timing into January can defer the tax bill by a full year. Splitting a bonus also lets you direct more into a traditional 401(k) pre-tax, which lowers the taxable amount. Ask payroll what is allowed before you sign a bonus agreement.
Disclaimer
This bonus tax calculator is provided for informational purposes only and does not constitute tax, payroll, legal, or financial advice. Withholding estimates use the IRS supplemental wage percentage method (22% up to $1 million, 37% above) and a flat 7.65% FICA assumption; they do not model the Social Security wage base cap, Additional Medicare Tax, local income taxes, your W-4 elections, or your employer's alternative aggregate-withholding method. Actual net pay depends on your filing status, total annual income, state of residence, and payroll processing. Always confirm your bonus withholding and final tax position with your payroll department or a qualified tax professional before making financial decisions.