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Flat Bonus Payroll Calculator
A bonus is considered supplemental income - separate from your regular salary or hourly rate, but still considered income. Vacation pay and moving expenses are other examples of supplemental income, and although they are sometimes classified as fringe benefits, they rest under both definitions.
How are bonuses taxed?
Percentage Method. The percentage method taxes a bonus at a flat rate, normally 25%. If the bonus is in excess of $1 million, it is taxed at a rate of 39.6%. This means that if your bonus is $5,000, and you are taxed using the percentage method, $1,250 goes to the IRS. This method is easy to calculate for both employee and employer because the bonus is taxed at a flat rate. To compute your take home pay based on the Percentage Method, use† Flat Bonus Calculator.
Aggregate Method. Using the Aggregate Method, your withholdings are calculated by adding your most recent paycheck and bonus together. Then, withholding amounts are computed by using the information you filled out on your W-4 form. To compute your take home pay based on the Aggregate Method, use†Aggregate Bonus Calculator.
Note: An annual bonus from your employer is always a welcome additional amount of income. However, it seems the tax bite out of a bonus check takes more than is left for you. Employers have the option on bonus payments of withholding tax at the same rate as your regular paychecks or at a flat 25 percent. Many employers chose the 25 percent option.
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Please note: Our payroll calculators that are provided on our web site are only meant to provide general guidance and estimates about the payroll process.