When you receive a bonus, commission, or other supplemental income in 2025, your paycheck often looks smaller than expected. That’s because the IRS requires special withholding rules for this type of pay. A bonus tax calculator helps you estimate your actual take-home pay after federal, FICA, and state taxes are applied.
Why Bonuses and Supplemental Income Are Taxed Differently
The IRS treats bonuses, overtime, and commissions as supplemental wages. Employers are required to withhold taxes using one of two methods:
- Percentage Method (Flat Rate):
- 22% federal withholding for amounts up to $1 million.
- 37% federal withholding if bonuses exceed $1 million in a calendar year.
- Aggregate Method:
- Bonus is added to your regular wages for the period and taxed at your normal withholding rate.
- This often results in a higher withholding because it pushes income into a higher bracket for that paycheck.
Both methods still include FICA taxes:
How to Calculate Your Bonus Taxes in 2025 (Step-by-Step)
Here’s a simple way to estimate your after-tax bonus manually:
- Start with the gross bonus amount.
Example: $5,000. - Apply the federal withholding rate.
- 22% × $5,000 = $1,100 withheld.
- Subtract FICA contributions.
- Social Security: 6.2% × $5,000 = $310.
- Medicare: 1.45% × $5,000 = $72.50.
- Account for state and local taxes.
- Varies by state. For example, in New York, around 6–8% could apply.
- Result: Estimated Net Bonus.
- $5,000 – $1,100 – $382.50 – (state tax) ≈ $3,300 take-home.
Example Bonus Calculations for 2025
| Bonus Amount | Method | Federal Withholding | FICA (7.65%) | State Tax (est.) | Net Bonus (approx.) |
|---|---|---|---|---|---|
| $5,000 | Percentage | $1,100 | $382.50 | $300 | $3,217.50 |
| $20,000 | Percentage | $4,400 | $1,530 | $1,200 | $12,870 |
Why Use a Bonus Tax Calculator?
While you can calculate manually, online bonus and supplemental income calculators give quick, accurate results by applying current IRS rules, FICA rates, and your state’s withholding tables. In 2025, many payroll platforms (PaycheckCity, OnPay, SurePayroll) have already updated their tools to match the new brackets.
Bonus Planning Tips for 2025
- Defer part of your bonus into a 401(k) or HSA to reduce taxable income.
- Adjust your W-4 temporarily if you expect a large bonus to avoid under- or over-withholding.
- Plan timing of bonuses (December vs January) if your employer allows flexibility, which can affect your annual tax liability.
FAQs
1. What is the federal bonus withholding rate in 2025?
It’s 22% for bonuses under $1 million and 37% for bonuses above that threshold.
2. Are bonuses taxed differently from regular income?
Yes, bonuses are classified as supplemental wages and are subject to mandatory flat-rate withholding or combined with regular wages under the aggregate method.
3. Do FICA taxes apply to bonuses?
Yes, Social Security and Medicare taxes apply to all bonus income, just like regular wages.
4. Can I reduce taxes on my bonus?
You can defer into retirement accounts, adjust W-4 allowances, or spread income across pay periods, but you can’t avoid federal withholding.
5. Do all states tax bonuses?
Most states do, but the rate varies. Some, like Texas and Florida, have no state income tax.
6. Why does my bonus check seem smaller?
Withholding rules often take a larger upfront bite than your actual tax liability, so refunds may balance it out at tax filing.
Bettye is the creator of CityPaycheckCalculator.com, a resource designed to help individuals quickly and accurately estimate their take-home pay across U.S. cities. With a strong focus on clarity, accuracy, and user experience, Bettye provides reliable paycheck calculators and helpful insights to support smarter financial decisions. Her mission is to make complex payroll and tax information simple and accessible for everyone.