Bonus Tax Calculator
For 2026 on a $5,000.00 bonus, a 22% federal rate, 7.65% FICA, and 5% state tax take $1,732.50. You take home $3,267.50.
Last reviewed
Your net bonus and tax withholding breakdown
Net Bonus
$3,267.50
Gross Bonus
$5,000.00
Total Withheld
$1,732.50
On a $5,000.00 bonus in 2026 at a 22% flat rate and 5% state rate, you take home $3,267.50. Taxes take $1,732.50 (34.65% of gross).
Payroll takes $1,100.00 for federal tax, $310.00 for Social Security, $72.50 for Medicare, and $250.00 for state tax.
On this $5,000.00 bonus, the 22% flat method takes $1,100.00 in federal tax. The Pub. 15-T aggregate method takes $1,166.31.
The top of this bonus lands in the 22% Form 1040 bracket on top of $78,000.00 of yearly pay, and $1,100.00 withheld matches your $1,100.00 tax to the cent.
Your bonus, withholding method, and year-to-date pay
- taxable bonus = $5,000.00 gross − $0.00 pre-tax = $5,000.00
- federal tax = 22% × $5,000.00 = $1,100.00
- Social Security = 6.2% × $5,000.00 = $310.00
- Medicare = 1.45% × $5,000.00 = $72.50
- state tax = 5% × $5,000.00 = $250.00
- net bonus = $5,000.00 − $1,732.50 = $3,267.50
Where every dollar of your bonus goes across bonus amounts
Net take-home bonus and total tax withheld across bonus sizes
Your bonus paycheck breakdown and Form W-2 boxes
| Line item | Amount | Form W-2 reporting |
|---|---|---|
| Gross bonus pay | $5,000.00 | Boxes 3 & 5 (FICA wages) |
| Federal income tax withheld (flat method) | $1,100.00 | Box 2 (federal income tax withheld) |
| Social Security tax | $310.00 | Box 4 (Social Security tax withheld) |
| Medicare tax | $72.50 | Box 6 (Medicare tax withheld) |
| State and local tax | $250.00 | Box 17 (state) & Box 19 (local) |
| Total taxes withheld | $1,732.50 | Sum of Boxes 2, 4, 6, 17, 19 |
| Net take-home bonus | $3,267.50 | Direct deposit / net check |
Your $5,000.00 gross bonus splits into $1,732.50 in taxes (34.65% of gross), and $3,267.50 net take-home pay. Form W-2 Box 1 reports $5,000.00 of income-taxable bonus pay, and Boxes 3 and 5 report $5,000.00 of FICA bonus pay.
Flat-rate vs. aggregate withholding vs. Form 1040 actual tax
| Method | Federal tax | FICA + state | Total deductions | Net bonus | April Form 1040 settlement |
|---|---|---|---|---|---|
| Flat-rate supplemental withholding | $1,100.00 | $632.50 | $1,732.50 | $3,267.50 | $0.00 (withholding matches Form 1040 tax) |
| Aggregate withholding (Pub. 15-T Worksheet 1A) | $1,166.31 | $632.50 | $1,798.81 | $3,201.19 | +$66.31 over-withheld (refunded at filing) |
| Form 1040 actual tax liability | $1,100.00 | $632.50 | $1,732.50 | $3,267.50 | $0.00 (true annual tax liability) |
On $5,000.00 of taxable bonus pay, the Pub. 15-T aggregate method withholds $66.31 more than the 22% flat method ($1,166.31 vs. $1,100.00). Actual Form 1040 federal tax, with the top of the bonus in the 22% bracket, is $1,100.00, and any gap between payday withholding and $1,100.00 is settled on Form 1040.
Net bonus and taxes withheld across gross bonus amounts
| Gross bonus | Federal tax | Social Security | Medicare | State tax | Total withheld | Net bonus |
|---|---|---|---|---|---|---|
| $1,000.00 | $220.00 | $62.00 | $14.50 | $50.00 | $346.50 | $653.50 |
| $2,500.00 | $550.00 | $155.00 | $36.25 | $125.00 | $866.25 | $1,633.75 |
| $5,000.00your bonus | $1,100.00 | $310.00 | $72.50 | $250.00 | $1,732.50 | $3,267.50 |
| $7,500.00 | $1,650.00 | $465.00 | $108.75 | $375.00 | $2,598.75 | $4,901.25 |
| $10,000.00 | $2,200.00 | $620.00 | $145.00 | $500.00 | $3,465.00 | $6,535.00 |
| $15,000.00 | $3,300.00 | $930.00 | $217.50 | $750.00 | $5,197.50 | $9,802.50 |
| $20,000.00 | $4,400.00 | $1,240.00 | $290.00 | $1,000.00 | $6,930.00 | $13,070.00 |
| $30,000.00 | $6,600.00 | $1,860.00 | $435.00 | $1,500.00 | $10,395.00 | $19,605.00 |
| $45,000.00 | $9,900.00 | $2,790.00 | $652.50 | $2,250.00 | $15,592.50 | $29,407.50 |
| $60,000.00 | $13,200.00 | $3,720.00 | $870.00 | $3,000.00 | $20,790.00 | $39,210.00 |
Across bonus tiers from $1,000.00 to $60,000.00 in 2026, net take-home bonus rises from $653.50 to $39,210.00. Your row at $5,000.00 withholds $1,732.50 (34.65%) and nets $3,267.50.
Net take-home bonus across gross bonus amounts
In 2026 with $50,000.00 of prior wages and a 5% state rate, a $1,000.00 bonus nets $653.50 and a $250,000.00 bonus nets $169,636.00.
| Gross bonus | Federal tax | Social Security | Medicare | State tax | Net bonus |
|---|---|---|---|---|---|
| $1,000 | $220.00 | $62.00 | $14.50 | $50.00 | $653.50 |
| $2,500 | $550.00 | $155.00 | $36.25 | $125.00 | $1,633.75 |
| $5,000 (closest to your input) | $1,100.00 | $310.00 | $72.50 | $250.00 | $3,267.50 |
| $7,500 | $1,650.00 | $465.00 | $108.75 | $375.00 | $4,901.25 |
| $10,000 | $2,200.00 | $620.00 | $145.00 | $500.00 | $6,535.00 |
| $15,000 | $3,300.00 | $930.00 | $217.50 | $750.00 | $9,802.50 |
| $25,000 | $5,500.00 | $1,550.00 | $362.50 | $1,250.00 | $16,337.50 |
| $50,000 | $11,000.00 | $3,100.00 | $725.00 | $2,500.00 | $32,675.00 |
| $100,000 | $22,000.00 | $6,200.00 | $1,450.00 | $5,000.00 | $65,350.00 |
| $250,000 | $55,000.00 | $8,339.00 | $4,525.00 | $12,500.00 | $169,636.00 |
Net take-home bonus by gross bonus amount (rows) and state and local tax rate in percent (columns).
| Bonus Amount by state and local tax rate | 0% | 3% | 5% | 6% | 8% | 10% |
|---|---|---|---|---|---|---|
| $1,000 | $703.50 | $673.50 | $653.50 | $643.50 | $623.50 | $603.50 |
| $2,500 | $1,758.75 | $1,683.75 | $1,633.75 | $1,608.75 | $1,558.75 | $1,508.75 |
| $5,000 (closest to your input) | $3,517.50 | $3,367.50 | $3,267.50 | $3,217.50 | $3,117.50 | $3,017.50 |
| $7,500 | $5,276.25 | $5,051.25 | $4,901.25 | $4,826.25 | $4,676.25 | $4,526.25 |
| $10,000 | $7,035.00 | $6,735.00 | $6,535.00 | $6,435.00 | $6,235.00 | $6,035.00 |
| $15,000 | $10,552.50 | $10,102.50 | $9,802.50 | $9,652.50 | $9,352.50 | $9,052.50 |
| $25,000 | $17,587.50 | $16,837.50 | $16,337.50 | $16,087.50 | $15,587.50 | $15,087.50 |
| $50,000 | $35,175.00 | $33,675.00 | $32,675.00 | $32,175.00 | $31,175.00 | $30,175.00 |
| $100,000 | $70,350.00 | $67,350.00 | $65,350.00 | $64,350.00 | $62,350.00 | $60,350.00 |
| $250,000 | $182,136.00 | $174,636.00 | $169,636.00 | $167,136.00 | $162,136.00 | $157,136.00 |
How year-to-date wages change FICA tax on your bonus
On a $5,000.00 bonus in 2026, moving from $30,000.00 of prior wages ($310.00 Social Security tax, $3,267.50 net) to $250,000.00 of prior wages ($0.00 Social Security tax, $3,532.50 net) reflects the Social Security cap and Additional Medicare Tax.
| Prior YTD wages | Social Security | Medicare | Total withheld | Net bonus |
|---|---|---|---|---|
| $30,000 | $310.00 | $72.50 | $1,732.50 | $3,267.50 |
| $50,000 (closest to your input) | $310.00 | $72.50 | $1,732.50 | $3,267.50 |
| $75,000 | $310.00 | $72.50 | $1,732.50 | $3,267.50 |
| $100,000 | $310.00 | $72.50 | $1,732.50 | $3,267.50 |
| $150,000 | $310.00 | $72.50 | $1,732.50 | $3,267.50 |
| $175,000 | $310.00 | $72.50 | $1,732.50 | $3,267.50 |
| $184,500 | $0.00 | $72.50 | $1,422.50 | $3,577.50 |
| $195,000 | $0.00 | $72.50 | $1,422.50 | $3,577.50 |
| $200,000 | $0.00 | $117.50 | $1,467.50 | $3,532.50 |
| $250,000 | $0.00 | $117.50 | $1,467.50 | $3,532.50 |
How your bonus withholding is calculated
Step 1 — Split W-2 Box 1 pay from FICA pay: Under 26 U.S.C. § 3401(a)(12)(A), a pre-tax retirement deferral on a bonus lowers Box 1 income tax pay. The yearly cap is $24,500 in 2026 and $23,500 in 2025 under IRS Notice 2025-67. Under 26 U.S.C. § 3121(v)(1)(A), retirement deferrals stay in Box 3 and Box 5 FICA pay.
Step 2 — Split yearly bonus pay at the $1,000,000 mark: Under 26 CFR 31.3402(g)-1(a)(2), an employer must take 37% on supplemental wages it has paid you above $1,000,000 in a year. Your Form W-4 cannot change that. IRS Pub. 15 Section 7 counts payments from all businesses under common control. Pay from an unrelated second employer is not added in.
Step 3 — Figure federal tax on the slice up to $1,000,000: On a separate bonus check, your job can use the 22% flat rate ($1,100.00 on $5,000.00). When a bonus is combined with regular pay, your job uses IRS Pub. 15-T Worksheet 1A. It finds tax on the combined check and subtracts tax on your regular check.
Step 4 — Figure Social Security and Medicare (FICA): Under 26 U.S.C. § 3101, Social Security takes 6.2% up to the yearly wage cap. Regular Medicare takes 1.45% on all bonus pay with no cap ($310.00 and $72.50 on $5,000.00). Once your yearly pay passes the threshold, your job also takes Additional Medicare Tax on the bonus.
Step 5 — Subtract state tax or gross up a target net: Multiply Box 1 bonus pay by your state rate ($250.00 at 5%). Subtract retirement savings and all taxes from gross pay to get your net bonus. In gross-up mode, divide your target net by the share you keep after tax.
Why bonus withholding on payday differs from the tax you actually owe on Form 1040
A bonus is not taxed at a special rate on your tax return. Under 26 U.S.C. § 3402, the 22% flat rate and the Pub. 15-T aggregate rule are only payday estimates. When you file Form 1040, your bonus joins regular W-2 Box 1 pay. It is taxed at your real bracket under Rev. Proc. 2025-32 (or Rev. Proc. 2024-40 for 2025). Check your full return in the federal income tax calculator.
Whether 22% creates a refund or a bill depends on your taxable pay after the $16,100.00 Single standard deduction in 2026. On the default $3,000.00 biweekly check ($78,000.00 a year), a Single filer has $61,900.00 of taxable pay in the 22% bracket ($50,400.00 to $105,700.00). A $5,000.00 bonus adds $1,100.00 of actual tax, matching the $1,100.00 flat tax to the cent. Under the aggregate method ($1,166.31 taken), $66.31 comes back as a refund. A Single worker at $55,000.00 sits in the 12% bracket ($600.00 tax) and gets a $500.00 refund from $1,100.00 taken. A Single worker at $150,000.00 sits in the 24% bracket ($1,200.00 tax) and owes $100.00 more at filing.
Flat 22%, aggregate, and 37% over-$1,000,000 withholding under 26 CFR § 31.3402(g)-1
Payroll must follow three IRS rules in 26 CFR 31.3402(g)-1 and IRS Pub. 15 Section 7. First, once the supplemental wages one employer (with businesses under its common control) has paid you in a year pass $1,000,000, the excess is withheld at a flat 37% rate. As 26 CFR 31.3402(g)-1(a)(2) states, "Withholding under this paragraph (a)(2) is mandatory flat rate withholding." IRS Pub. 15 Section 7 adds, "Withhold using the 37% rate without regard to the employee’s Form W-4."
Second, up to $1,000,000, your job can use the 22% flat rate if it states the bonus separately. It must also have taken income tax from your regular pay this year or last year. Third, if your job combines the bonus with regular pay without listing each amount, it must use the aggregate method. It must also use the aggregate method if no income tax was taken from your regular pay.
Video walkthrough
A 3½-minute walkthrough of what a bonus pays after withholding, and what you settle at tax time.
Read the transcript
How much of a bonus do you keep
0:00 Your bonus is not your paycheck.
0:02 On $5,000 of bonus, with a 22% federal rate and 5% state tax, you take home about $3,300 once payroll has taken its share.
0:14 Payroll takes about $1,700 of it first, before you ever see the check.
0:19 That is federal income tax, Social Security, Medicare and state tax, and this page keeps them apart.
0:26 The same taxes come out of most bonuses.
0:29 What changes with the size is the rate you end up paying, and that is settled months later.
Where the withheld money goes
0:35 Federal income tax takes about $1,100 of it, and it is the largest of them.
0:41 Social Security takes about $310, Medicare takes its own share, and your state takes about $250.
0:49 The worked sheet shows the working itself: 22% of your bonus is federal tax, and every line below that one takes its own share of what is left.
0:59 The last line is what reaches your hand.
1:02 One more line changes this: a pre-tax 401(k) cuts the federal income tax, and Social Security and Medicare still take their share of the whole bonus.
1:12 Ask your employer before payday if the bonus can be deferred.
What you owe at tax time
1:16 What payroll takes is only an estimate: payroll holds back 22% of the bonus on the spot, and that flat rate is not your own tax rate.
1:26 On $78,000 of other pay, the top of the bonus lands in the 22% bracket, so the real tax matches what payroll took.
1:35 The same bonus on a bigger salary tells a different story: the real tax is about $1,200, so about $100 is owed at filing.
Why payroll took more than the flat rate
1:45 A bonus your job lists by itself can be withheld at a flat rate.
1:50 If it rides with your regular pay, payroll uses the aggregate method, and takes more.
1:55 On this bonus the aggregate method takes about $1,170, about $70 more than the flat rate.
2:03 Your real tax does not change, so the extra comes back to you at filing.
Where Social Security stops
2:08 Social Security tax stops at the yearly wage base, $184,500.
2:15 Once your other pay reaches it, the bonus pays no Social Security tax.
2:19 Medicare has no such cap, so it keeps taking its share of the whole bonus.
2:24 Take a case where your other pay has already used most of the base, as a high earner late in the year has.
2:31 Watch the band: Social Security stops at $34,500 of bonus, and from there on only Medicare takes its share.
Try your own numbers
2:40 To try your own numbers, enter your bonus and your pay so far.
2:44 Try a bigger bonus: $25,000 keeps the same rates, and about $16,300 lands in your hand.
2:52 The same taxes run through it.
2:55 If your job puts the bonus in the same check as your regular pay, switch Calculate to the aggregate method: about $3,200 in your hand, and the extra federal tax comes back at filing.
When your employer tops it up
3:08 If your employer promises a net check, the gross-up mode works backwards.
3:12 It works out the gross pay, about $15,300, that leaves about $10,000 in your hand, because the extra pay to cover the tax is itself taxed.
3:23 So: payroll takes the tax first, and your bonus is taxed at your own rate.
3:28 Check your own bonus at fastcalc.us.
Bonus tax and gross-up formulas
TaxableBonus = max(0, GrossBonus − min(round(GrossBonus × r_401k), L_402g)) (W-2 Box 1 bonus; L_402g = $24,500 in 2026, $23,500 in 2025, less what you already deferred this year) T_fed,flat = round(r_flat × min(TaxableBonus, max(0, $1,000,000 − SuppBefore)) + 0.37 × max(0, TaxableBonus − max(0, $1,000,000 − SuppBefore))) T_fed,agg = Pub15T(RegularPay + B_under1M) − Pub15T(RegularPay) + round(0.37 × B_over1M) (26 CFR § 31.3402(g)-1(a)(6); IRS Pub. 15-T Worksheet 1A) T_fica = round(0.062 × min(GrossBonus, max(0, B_oasdi − WagesBefore))) + round(0.0145 × GrossBonus + 0.009 × max(0, WagesBefore + GrossBonus − max(WagesBefore, $200,000))) NetBonus = GrossBonus − D_401k − T_fed − T_fica − round(r_state × TaxableBonus); GrossUp = TargetNet ÷ (1 − r_total) (piecewise across caps)
Worked bonus tax examples
Example 1 — Default $5,000.00 bonus, flat vs. aggregate (2026 Single, Biweekly $3,000.00 pay, $50,000.00 prior pay, 0% retirement, 5% state). By the flat method, federal tax is 22% × $5,000.00 = $1,100.00. Social Security is $310.00, Medicare is $72.50, and state tax is $250.00. Total tax is $1,732.50, leaving $3,267.50 net. By the aggregate method, $5,000.00 joins $3,000.00 of biweekly pay ($8,000.00 total). Pub. 15-T tax is $1,486.69 on the combined check minus $320.38 on regular pay, or $1,166.31 federal tax ($1,798.81 total, 35.98%). That leaves $3,201.19 net.
Example 2 — $25,000.00 bonus crossing the $184,500.00 Social Security cap with 10% 401(k) (2026 Single, $175,000.00 prior pay, 22% flat, 5% state). A 10% 401(k) puts $2,500.00 in Box 12 (code D) and leaves $22,500.00 in Box 1. Federal tax is 22% × $22,500.00 = $4,950.00, and state tax is 5% × $22,500.00 = $1,125.00. Prior pay of $175,000.00 leaves $9,500.00 under the $184,500.00 cap. Social Security is 6.2% × $9,500.00 = $589.00, saving $961.00. Medicare is 1.45% × $25,000.00 = $362.50. Total tax is $7,026.50 (28.11% of gross), leaving $15,473.50 net.
Example 3 — Gross-up for a $10,000.00 target net bonus (2026 Single, $50,000.00 prior pay, 22% flat, 0% retirement, 5% state). Below the Social Security cap, total tax is 34.65% of gross pay. Dividing $10,000.00 by 0.6535 gives a gross-up bonus of $15,302.22. Payroll takes $3,366.49 federal, $948.74 Social Security, $221.88 Medicare, and $765.11 state ($5,302.22 total). That leaves $10,000.00 net to the cent.
How the $184,500 Social Security cap, $200,000 Additional Medicare threshold, and 401(k) deferrals change your net bonus
FICA taxes change your net bonus rate at two pay marks: $184,500.00 and $200,000.00. For 2026 Social Security caps at $184,500.00 of pay ($11,439.00 max tax; $176,100.00 and $10,918.20 in 2025). Once prior pay at one job hits $184,500.00, Social Security tax on your bonus drops to 0% (+$62.00 net per $1,000.00). If two jobs withhold more than $11,439.00 total in 2026, the Form W-2 instructions let you claim the excess on Form 1040. Under IRS Topic no. 751, your job must take 0.9% Additional Medicare Tax once pay passes $200,000.00 (even though IRS Topic no. 560 sets the Married Filing Jointly tax line at $250,000.00). Total Medicare rises to 2.35%. Check your full-year figure in the additional Medicare tax calculator.
Putting part of your bonus into a pre-tax 401(k) cuts federal and state tax right away. Your yearly total across plans and paychecks cannot pass the IRC § 402(g)(1) cap, so what you deferred earlier in the year uses up part of the room. Retirement money leaves W-2 Box 1 but stays in FICA Boxes 3 and 5. Putting 10% ($1,000.00) of a $10,000.00 bonus into a 401(k) at 22% federal and 5% state rates saves $220.00 federal and $50.00 state tax ($270.00 total). Social Security ($620.00) and Medicare ($145.00) stay the same.
How employer bonus gross-ups work across FICA and supplemental tax caps
When a company promises a fixed net check — like a $5,000.00 net relocation bonus — payroll must pay a larger gross amount. Under the General Instructions for Forms W-2 and W-3, if an employer pays the employee’s share of social security and Medicare taxes, it must include these payments as wages. The company must pay tax on the tax.
Inside one tax tier, gross pay equals Target Net ÷ (1 − Total Tax Rate). At 22% federal, 7.65% FICA, and 5% state tax, total tax is 34.65%. You keep 65.35% (1 − 0.3465 = 0.6535). A $5,000.00 target net takes $5,000.00 ÷ 0.6535 = $7,651.11 gross ($2,651.11 tax). When a gross-up crosses the Social Security cap, the Additional Medicare mark, or the $1,000,000.00 mark under 26 CFR 31.3402(g)-1(a)(2), the rate shifts at each line.
Assumptions and IRS limits
- Flat withholding uses 22% up to $1,000,000 of yearly supplemental pay from one employer (and businesses under its common control). Above $1,000,000, it uses 37% under 26 CFR 31.3402(g)-1 and IRS Pub. 15 Section 7. The flat-rate box lets you try a different rate as a what-if, but 22% is the only optional flat rate the rule allows. Wages paid earlier include any supplemental wages already paid, and a lower figure is raised to match.
- Aggregate withholding uses IRS Pub. 15-T (2026 and 2025) Worksheet 1A for a 2020-or-later Form W-4 with Step 2 unchecked. Line 1g credits are $8,600 for Single and Head of Household, and $12,900 for Married.
- Return tax compares yearly tax with and without the bonus on top of regular pay after the standard deduction. Under Rev. Proc. 2025-32, 2026 standard deductions are $16,100 Single, $32,200 Married, and $24,150 Head of Household ($15,750, $31,500, and $23,625 in 2025).
- Social Security tax applies up to the yearly wage base, and regular Medicare applies to all gross bonus pay. Employers withhold Additional Medicare Tax once year-to-date pay passes the $200,000 threshold.
- Pre-tax retirement cuts stop at the yearly IRC § 402(g)(1) cap, less what you enter as already deferred this year, without age catch-up amounts. They lower federal and state taxable pay but stay in FICA pay.
These figures are estimates for learning and planning, not financial, tax, legal or investment advice. Terms of use.
What to do with your bonus tax numbers
Check your flat tax against your Form 1040 tax in the second table above. If your bracket is 12% ($500.00 over-withheld on the default bonus) or 32% ($500.00 under-withheld), open the federal paycheck withholding calculator or the IRS Tax Withholding Estimator. Use them to update Form W-4 Step 4(c).
Ask HR if your plan lets you set a separate 401(k) rate on bonuses before payday. Putting bonus money in a pre-tax plan shelters the part of the yearly $24,500 limit in 2026 that your earlier paychecks have not used. Enter what you have already deferred, and the page counts only the room that is left. Test the growth in the 401(k) calculator.
If your job pays bonuses inside a regular check, expect the aggregate method to take more upfront. Open the take-home pay calculator to see your normal check across 26 biweekly periods, or compare a base bump in the pay raise calculator.
When you negotiate a sign-on or moving bonus that you need in full, switch Calculate to Gross-Up Mode. Share the gross-up bonus ($7,651.11 for a $5,000.00 net check) with HR.
Frequently asked questions
Why are bonuses withheld at 22%, and is a bonus taxed higher than regular salary?
A bonus is not taxed at a higher rate on your tax return; it is only withheld differently on payday. Under 26 CFR 31.3402(g)-1 and IRS Pub. 15 Section 7, bonuses and RSU checks are supplemental pay. Jobs can withhold a flat 22% federal rate on yearly bonus pay up to $1,000,000. On the default $5,000.00 bonus, payroll takes $1,100.00 in federal tax and $632.50 in FICA and state tax, leaving $3,267.50 net. At tax time, the bonus joins Box 1 pay and is taxed at your real bracket.
How much is a $1,000, $5,000, or $10,000 bonus after taxes in 2026?
Below the Social Security cap at 22% federal and 5% state tax, total withholding is 34.65% of gross pay. A $1,000.00 bonus nets $653.50 ($346.50 taken). A $5,000.00 bonus nets $3,267.50, and a $10,000.00 bonus nets $6,535.00 ($3,465.00 taken). In a state with 0% income tax, total withholding is 29.65%, so $1,000.00 nets $703.50, $5,000.00 nets $3,517.50, and $10,000.00 nets $7,035.00.
Why did my employer withhold more than 22% federal tax on my bonus?
If your bonus was combined with regular pay, payroll used the IRS aggregate method. Under IRS Pub. 15-T Worksheet 1A, payroll adds the bonus to one regular check and multiplies by your yearly pay periods. That makes a one-time bonus look like a large yearly raise, which can push the check into a higher bracket. On a $5,000.00 bonus added to a $3,000.00 biweekly check ($208,000.00 annualized), the aggregate method takes $1,166.31 instead of $1,100.00 at 22%.
When does 26 CFR 31.3402(g)-1 require the aggregate method or the mandatory 37% rate instead of 22%?
Under 26 CFR 31.3402(g)-1(a)(2) and IRS Pub. 15 Section 7, an employer must take 37% on supplemental pay it has paid you above $1,000,000 in a year, counting its related businesses. Form W-4 entries cannot lower that 37% rate. Below $1,000,000, the job must use the aggregate method if it combines the bonus with regular pay without listing the bonus separately. It must also use the aggregate method if no federal income tax was taken from your regular pay this year or last year.
Does a 401(k) deduction from my bonus reduce Social Security and Medicare taxes?
No. A pre-tax retirement cut lowers federal and state taxable pay in W-2 Box 1, but stays inside Social Security pay (Box 3) and Medicare pay (Box 5). On the default $5,000.00 bonus, a 10% ($500.00) retirement deferral cuts federal flat tax to $990.00 and 5% state tax to $225.00, saving $135.00 in income tax. FICA still takes $382.50 on the full $5,000.00 gross bonus.
How do I gross up a bonus so an employee takes home an exact net amount?
Divide the target net bonus by (1 − total tax rate). Because employer-paid employee taxes are extra wages, grossing up pays tax on the tax. Below the Social Security cap at 22% federal and 5% state tax, the worker keeps 65.35% of gross pay. A $2,000.00 target net takes about $2,000.00 ÷ 0.6535 = $3,060.44, and because each tax rounds to the cent, the gross is $3,060.45 ($1,060.45 in taxes). If the bonus crosses a FICA or supplemental cap, use Gross-Up Mode above.
Sources
- 26 CFR 31.3402(g)-1, supplemental wage payments (eCFR) (page modified Oct 26, 2026)
- IRS, Publication 15 (2026), Employer’s Tax Guide (page reviewed Apr 30, 2026)
- IRS, Publication 15-T (2026), Federal Income Tax Withholding Methods (page reviewed Apr 30, 2026)
- IRS, Publication 15-T (2025), Federal Income Tax Withholding Methods (page modified Dec 14, 2024)
- IRS, Rev. Proc. 2025-32, 2026 inflation adjustments (page modified Oct 17, 2025)
- IRS, Rev. Proc. 2024-40, 2025 inflation adjustments (page modified Oct 22, 2024)
- IRS, Notice 2025-67, 2026 amounts relating to retirement plans and IRAs, as adjusted for changes in cost-of-living (page modified Nov 13, 2025)
- IRS, General Instructions for Forms W-2 and W-3 (2026) (page reviewed Apr 30, 2026)
- IRS, Form W-4 (2026), Employee's Withholding Certificate (page modified Dec 11, 2025)
- IRS, Topic no. 751, Social Security and Medicare withholding rates (page reviewed Sep 24, 2026)
- IRS, Topic no. 560, Additional Medicare Tax (page reviewed Oct 9, 2026)
- IRS, Tax Withholding Estimator (page reviewed Jun 27, 2026)
- Social Security Administration, Contribution and Benefit Base (current version)
- 26 U.S.C. 3101, rate of Social Security and Medicare taxes (Cornell LII text) (current version)
- 26 U.S.C. 3121, definitions for Social Security and Medicare taxes (Cornell LII text) (current version)
- 26 U.S.C. 3401, definitions for income tax withholding (Cornell LII text) (current version)
- 26 U.S.C. 3402, income tax collected at source (Cornell LII text) (current version)
More in Income and Tax Calculators and Finance Calculators.