Receiving a bonus is great, but the amount that hits your bank account is often less than expected due to tax withholding.
In the US, bonuses are considered "supplemental income" and are typically taxed at a flat federal withholding rate of 22% (for bonuses under $1 million).
In addition to federal tax, you also have to pay Social Security (6.2%) and Medicare (1.45%) taxes, plus any applicable state taxes.
How It's Calculated
- Federal Tax: Usually 22% flat rate.
- Social Security: 6.2% (up to the annual wage base limit).
- Medicare: 1.45% (no limit).
- State Tax: Varies by state.