Kentucky Bonus Tax Calculator 2025
How to Use This Calculator
Enter Your Bonus Amount
Input the total gross bonus amount you're receiving from your employer.
Select Your Tax Method
Percentage Method: When your bonus is paid separately from your regular paycheck.
Aggregate Method: When your bonus is combined with your regular paycheck.
Add Regular Paycheck (If Applicable)
For the Aggregate Method, enter your regular paycheck amount to calculate accurate withholding.
View Your Results
The calculator will show:
- Federal tax withheld
- Kentucky state tax withheld
- Social Security and Medicare taxes
- Total tax withheld
- Your final take-home bonus amount
Note: This calculator uses updated 2025 Kentucky tax rates and federal supplemental wages tax rates.
What Is a Bonus Tax and Why Does It Matter in Kentucky?
Bonuses are extra payments from employers, often called supplemental income. The IRS and Kentucky tax these differently than regular wages, which can increase your tax bill. Knowing how bonus taxes work helps you budget better in 2025.
In Kentucky, bonuses face federal and state withholding, plus Social Security and Medicare taxes. Misjudging these rates could leave you with less take-home pay than expected. This section breaks it down simply.
- Federal Tax Impact: Bonuses are taxed at a flat 22% (or 37% if over $1 million) under the percentage method.
- Kentucky State Tax: A flat 4.5% applies to all income, including bonuses, in 2025.
- Why It Matters: Higher tax rates on bonuses reduce your net payout.
Federal and Kentucky Tax Rates for Bonuses in 2025
Tax rates determine how much of your bonus you keep. For 2025, federal and Kentucky rules set clear guidelines. Understanding these rates helps you predict your net bonus.
Federally, bonuses are supplemental income, taxed at 22% or 37% based on size. Kentucky’s flat 4.5% income tax applies to all residents, including bonuses. Additional payroll taxes like Social Security (6.2%) and Medicare (1.45%) also hit your bonus.
- Federal Rate: 22% for most; 37% if bonus exceeds $1 million.
- Kentucky Rate: 4.5% flat tax, unchanged for 2025 per recent state updates.
- Payroll Taxes: 7.65% total (Social Security + Medicare) on bonuses up to wage limits.
Factors That Affect Your Bonus Tax in Kentucky
Several factors influence your bonus tax in 2025. These include your income level, filing status, and local taxes. Knowing them helps you plan better.
Kentucky’s flat tax simplifies state calculations, but federal brackets and deductions vary. Local occupational taxes in some Kentucky cities also apply. Here’s what to watch.
- Income Level: Higher earnings may push federal tax to 37%.
- Filing Status: Married filers might see lower effective rates.
- Local Taxes: Cities like Louisville add 1-2% occupational taxes.
Actionable Takeaways for 2025 Bonus Planning
Mastering bonus tax calculations saves you money and stress. Use a Kentucky Bonus Tax Calculator to estimate withholding accurately. Plan ahead with these tips:
- Estimate Early: Run numbers before your bonus arrives.
- Adjust Withholding: Update your W-4 if taxes seem too high.
- Explore Deductions: Contribute to a 401k to reduce taxable income.