Bonus Tax Calculator 2025
How to Use This Calculator
Find Your State Bonus Tax Calculator
Select your state below to calculate how much tax will be withheld from your bonus payment and estimate your take-home amount.
What Is a Bonus Tax?
A bonus tax is the amount of money taken out of your bonus by the government. It's part of your regular income tax. Bonuses are extra payments you get from your job. These can include holiday bonuses, performance rewards, signing bonuses, or referral bonuses.
The IRS calls bonuses supplemental wages. These are taxed differently from your regular paycheck. Sometimes, the tax is taken out using a flat rate method. Other times, it's added to your regular pay and taxed at your normal income rate.
Example:
Let's say you earn a $1,000 bonus:
If added to your paycheck, your total income may be taxed in a higher bracket, so you might get less.
Bonus income is also shown on your W-2 form, just like your regular salary. Your employer's payroll system handles this.
Key Terms:
State Bonus Tax Rates by State (2025 Updated)
Use the table below to see your state's bonus tax rate and how it's applied in 2025:
| State | Bonus Tax Method | State Bonus Tax Rate (2025) |
|---|---|---|
| Alabama | Withholding | Based on income |
| Alaska | No state income tax | 0% |
| Arizona | Flat rate | 4.8% |
| Arkansas | Withholding | Based on income |
| California | Flat rate | 10.23% |
| Colorado | Flat rate | 4.4% |
| Connecticut | Withholding | Up to 6.99% |
| Delaware | Withholding | Based on income |
| Florida | No state income tax | 0% |
| Georgia | Flat rate | 5.75% |
| Hawaii | Withholding | Up to 11% |
| Idaho | Flat rate | 5.8% |
| Illinois | Flat rate | 4.95% |
| Indiana | Flat rate | 3.23% |
| Iowa | Withholding | Up to 8.53% |
| Kansas | Flat rate | 5.7% |
| Kentucky | Flat rate | 4.5% |
| Louisiana | Withholding | Based on income |
| Maine | Withholding | Up to 7.15% |
| Maryland | Withholding | 2%–5.75% |
| Massachusetts | Flat rate | 5.0% |
| Michigan | Flat rate | 4.25% |
| Minnesota | Withholding | Up to 9.85% |
| Mississippi | Withholding | Based on income |
| Missouri | Withholding | Based on income (max ~4.95%) |
| Montana | Withholding | Up to 6.75% |
| Nebraska | Withholding | Based on income |
| Nevada | No state income tax | 0% |
| New Hampshire | No wage tax (interest only) | 0% |
| New Jersey | Withholding | Up to 10.75% |
| New Mexico | Withholding | Based on income |
| New York | Withholding | Up to 10.9% |
| North Carolina | Flat rate | 4.75% |
| North Dakota | Flat rate | 1.95% |
| Ohio | Withholding | Based on income |
| Oklahoma | Flat rate | 4.75% |
| Oregon | Withholding | Up to 9.9% |
| Pennsylvania | Flat rate | 3.07% |
| Rhode Island | Withholding | Up to 5.99% |
| South Carolina | Withholding | Up to 6.5% |
| South Dakota | No state income tax | 0% |
| Tennessee | No state income tax | 0% |
| Texas | No state income tax | 0% |
| Utah | Flat rate | 4.85% |
| Vermont | Withholding | Up to 8.75% |
| Virginia | Withholding | Up to 5.75% |
| Washington | No state income tax | 0% |
| West Virginia | Withholding | Up to 6.5% |
| Wisconsin | Withholding | Up to 7.65% |
| Wyoming | No state income tax | 0% |
| Washington D.C. | Withholding | Up to 10.75% |
High-Tax States for Bonuses
These states take the highest cut from your bonus through state income tax:
- California 10.23%
- New York Up to 10.9% (varies by income)
- Oregon Up to 9.9%
- Minnesota Up to 9.85%
- New Jersey Up to 10.75%
- Vermont Up to 8.75%
- Iowa Up to 8.53%
- Wisconsin Up to 7.65%
- Hawaii Up to 11%
- Connecticut Up to 6.99%
These high-tax states may reduce your take-home bonus more than others.
No State Income Tax States
These 9 states do not tax bonuses in 2025 because they have no state income tax:
*New Hampshire has no tax on wages, only interest/dividends
💡 If you live in one of these states, you only pay federal and FICA taxes on your bonus. That means more money in your pocket.
How Are Bonuses Taxed in 2025?
In 2025, the IRS allows two main ways to tax your bonus: the Flat Rate Method and the Aggregate Method. Your employer picks the method. This affects how much federal tax is taken from your bonus.
Here’s a quick comparison:
Flat Rate
Tax Rate (Federal): 22%
How It Works: Bonus taxed separately at flat 22%
Common Use: Large or separate bonuses
Aggregate Method
Tax Rate (Federal): Based on income
How It Works: Bonus added to paycheck and taxed normally
Common Use: Smaller or regular paycheck bonuses
Bonus Tax Calculation Steps (2025):
- Employer chooses flat rate or aggregate.
- Bonus amount is entered into payroll.
- Federal tax is withheld based on method.
- Other taxes (Social Security, Medicare, state) are also taken out.
- The remaining amount is sent in your paycheck or direct deposit.
Flat Rate Method (22% Withholding Rule)
The flat rate method is simple. In 2025, the IRS federal bonus tax rate is 22%. Employers use this for bonuses given separately from regular pay.
Example:
You get a $2,000 bonus
Employer uses flat rate method
Federal tax withheld = 22% of $2,000 = $440
You take home: $1,560 (before other taxes)
- Easy to understand
- Predictable withholding amount
- May over-tax low earners
- Doesn't account for your full tax situation
Aggregate Method (Add to Regular Paycheck)
With the aggregate method, your bonus is added to your normal paycheck. Then, your employer calculates tax based on your total income using regular withholding tables.
Example:
Weekly pay: $1,000
Bonus: $1,000
Total this week = $2,000
Withholding is calculated as if you earned $2,000 regularly
If you’re in a higher tax bracket that week, you might pay more tax
Key Point: This method can lead to higher withholding if the bonus pushes you into a higher bracket temporarily.
Use a bonus tax calculator to estimate your take-home amount and choose the best method for your situation.
2025 Bonus Tax Changes and Updates
Several key tax changes for 2025 affect how your bonus gets taxed. Here are the most important updates you need to know:
- Social Security wage base increased to $176,100 for 2025 (up from $168,600 in 2024)
- People earning over $176,100 will pay about $465 more in Social Security taxes this year
- Your bonus still gets hit with the 6.2% Social Security tax rate if your total wages stay under this limit
- Federal bonus tax rates remain the same: 22% for bonuses under $1 million, 37% for bonuses over $1 million
- Medicare tax stays at 1.45% (plus 0.9% additional Medicare tax on high earners)
- FICA tax rates haven't changed for 2025
What This Means for Your Bonus: If you earn more than $176,100 total (including your bonus), the bonus portion above this limit won't be subject to Social Security tax. This could actually save you money on larger bonuses.
Bonus Tax by Employee Type
Your employment status changes how your bonus gets taxed. W-2 employees and 1099 contractors face different tax rules and withholding requirements.
W-2 Employee Bonus Taxes
As a W-2 employee, your employer handles bonus tax withholding automatically. Here's how it works:
- Your employer withholds federal taxes at 22% (or 37% for bonuses over $1 million)
- Social Security tax: 6.2% (up to the $176,100 wage base)
- Medicare tax: 1.45% (plus 0.9% if you earn over $200,000)
- State taxes based on your state's supplemental wage rate
Two Withholding Methods:
- Percentage Method: Your employer taxes the bonus at a flat 22% rate
- Aggregate Method: Your employer combines your bonus with regular pay and calculates withholding
What Appears on Your Paystub:
- Gross bonus amount
- Federal tax withheld
- FICA taxes (Social Security + Medicare)
- State tax withheld (if applicable)
- Net bonus amount (your take-home)
Independent Contractor Bonus Payments
As a 1099 contractor, you're responsible for paying taxes on bonus payments yourself. No automatic withholding happens.
- Pay self-employment tax: 15.3% (Social Security + Medicare combined)
- Pay federal income tax at your regular rate
- Make quarterly estimated tax payments to avoid penalties
- Track bonus payments for year-end tax filing
Key Differences from W-2 Employees:
- No employer withholding
- Higher overall tax rate due to self-employment tax
- Must pay estimated taxes quarterly
- Need to set aside money for tax payments
Strategies to Reduce Tax on Your Bonus
Want to keep more of your bonus in 2025? Smart tax strategies can help you reduce bonus tax, lower your withholding, and boost your take-home pay. Here are a few ways to minimize taxes on your bonus legally:
✅ Actionable Ways to Reduce Bonus Tax:
- Max Out Your 401(k) or Retirement Plan
- Time Your Bonus Payment Wisely
- Ask for a Separate Bonus Check (Flat Rate)
- Use a Health Savings Account (HSA)
- Plan With a Tax Advisor for Deferred Compensation
These steps let you lower your taxable income or shift income to a year with a lower tax rate.
Maximize Retirement Contributions
One of the best ways to reduce bonus tax is to put part of your bonus into a retirement plan, like a 401(k). These contributions are pre-tax, so you don't pay income tax on that part now.
Why it helps:
• Lowers your taxable income
• Reduces how much tax is taken from your bonus
• Grows your savings for the future
2025 Contribution Limits:
401(k) Limit: $23,000 (under age 50)
Catch-Up (50+): Extra $7,500
IRA Limit: $7,000 (under age 50), $8,000 (50+)
👉Ask your employer if you can direct part of your bonus into your 401(k). It must happen before payroll processes the bonus.
Timing Your Bonus Payment
The timing of your bonus can affect how much tax you pay. If your bonus pushes your income into a higher tax bracket, you'll lose more to taxes.
Strategic Tip:
Ask your employer to delay your bonus until the next calendar year (January) if it helps keep you in a lower tax bracket this year.
Or, request it early in a year where your income may be lower.
This strategy works best with year-end bonuses and requires advanced planning.
Bonus deferral may not be available to all employees. Check with HR or a tax advisor.