Bonus Tax Pay Calculator (Percentage Method)

Simplify bonus pay tax calculations with TopRoute's Bonus Tax Calculator. Use the percentage method to get accurate results for employee bonuses.

Use this bonus calculator to make sure you are withholding the right amount of state and federal taxes from employee bonuses.

Everyone enjoys a little extra money for a job well done, and as an employer, giving your employees bonuses is a great way to express appreciation. However, do not forget that you have a responsibility to withhold the right amount of taxes on these bonus payments, just like you would with regular paychecks.

In case you do not know the applicable tax rates, a bonus paycheck tax calculator can assist you in getting the correct federal and state withholding amounts.

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Percentage Method vs. Aggregate Method for Bonus Taxation

The Percentage Method applies a flat 22% tax on bonuses, used when paid separately. The Aggregate Method taxes bonuses based on the employee’s regular income tax rate when paid with regular wages.

Free Bonus Tax Pay Calculator (Percentage Method)

Bonus Amount*

Regular Annual Wages*

Pay Frequency*

Filing Status*

State*

Your Results

Bonus Amount

Federal Withholding

State Withholding

Social Security

Medicare

Net Bonus

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Frequently Asked Questions

Supplemental wages include any additional earnings paid to employees above their regular salary or hourly wage. Examples include bonuses, commissions, overtime pay, holiday bonuses, severance pay, sick leave, tips, and financial awards. These payments are usually taxed differently than regular wages and, if paid separately, need special tax calculations, for which a bonus tax calculator is very useful.

For tax year, the IRS taxes bonuses at a flat federal rate of 22%. The usual FICA taxes - Social Security and Medicare taxes - also are withheld on the bonus. State tax rates for bonuses will vary, so be sure to select your state in the calculator to get your correct withholding amount. For amounts over $1 million, the rate goes up to 37% regardless of whether they are paid as a lump sum or accumulated over the year.

The percentage method calculates the amount of withholding tax on bonuses based upon a flat rate of 22%. This methodology simplifies the process whereby the employer may withhold taxes from bonus payments because it is easy to compute the right federal amount instantly.

To use the bonus tax calculator, enter your employee's total gross pay for the year, the bonus amount, any additional deductions, and select your state. The calculator will then apply the appropriate tax rates to calculate the federal and state taxes that should be withheld from the bonus.

In addition to the flat 22% federal tax, the usual FICA taxes (Social Security and Medicare) are withheld from bonuses. Your state may also require its own tax withholding, which can vary depending on where your employee works.

Yes, when bonuses are paid separately from regular wages, a different tax calculation is required. The bonus tax calculator helps ensure that the right amount is withheld for federal and state taxes.

Most employees cannot avoid tax withholding on a bonus. However, for an employee who qualifies as exempt (for example, exempt from federal income tax), you can check the exemption box on the calculator, which will adjust the amount of withholding.

Federal taxes are 22% for bonuses less than $1 million. Bonuses above this amount are taxed at a higher federal rate of 37%. Make sure to enter the correct bonus amount in the calculator to get the right withholding.

Yes, state taxes usually are applied to bonuses, although the rate can depend upon which state the employee works in; therefore, choose the correct state through the use of the calculator to ensure proper state withholding taxes.

The bonus tax calculator is also designed for supplemental wages, that include holiday bonuses, commissions, severance pay, and other miscellaneous one-time payments. It streamlines withholding and helps with accuracy of tax calculations in regard to bonuses of every kind.