1. What is the Bonus Tax Calculation?

The IRS typically withholds federal income tax from bonuses at a flat rate of 22% for supplemental wage payments up to $1 million. This calculator helps estimate your total tax liability by adding any applicable state taxes.

2. How Does the Calculator Work?

The calculator uses the following equation:

Where:

• \( Bonus \) — The bonus amount in USD
• \( 0.22 \) — The IRS flat tax rate for bonuses
• \( State\ Tax \) — Any additional state tax on the bonus

Explanation: The calculator first computes the 22% federal withholding, then adds any state taxes you specify to determine your total tax liability.

3. Importance of Bonus Tax Calculation

Details: Understanding your tax liability on bonus payments helps with financial planning and prevents surprises when you receive your payment. The 22% rate is a withholding rate - your actual tax liability may differ when you file your return.

4. Using the Calculator

Tips: Enter your bonus amount in USD and any applicable state tax amount. Both values must be positive numbers. The calculator will show your estimated federal withholding, total taxes, and net payment.

5. Frequently Asked Questions (FAQ)

Q1: Is the 22% rate always applied to bonuses?
A: For bonuses under $1 million, yes. For amounts over $1 million, the rate increases to 37%. Some exceptions may apply.

Q2: Will I owe more taxes when I file my return?
A: Possibly. The 22% is a withholding rate. Your actual tax rate depends on your total income and tax bracket.

Q3: Are state taxes always applied to bonuses?
A: Most states tax bonuses as regular income, but some states have no income tax. Check your state's regulations.

Q4: Can my employer use a different withholding method?
A: Employers may use the aggregate method (combining with regular paycheck) if it results in more accurate withholding.

Q5: Are bonus taxes refundable?
A: If too much was withheld, you may receive a refund when you file your annual tax return.