1. What is Federal Bonus Tax?

The federal bonus tax is a flat 22% tax rate applied to supplemental wages like bonuses in the United States. For bonuses over $1 million, the rate increases to 37% (under current tax laws).

2. How Does the Calculator Work?

The calculator uses the standard federal bonus tax formula:

Where:

• \( Bonus \) — The gross bonus amount in USD
• \( 0.22 \) — The 22% federal bonus tax rate

Explanation: The calculation is straightforward - multiply the bonus amount by 0.22 to get the tax amount.

3. Importance of Bonus Tax Calculation

Details: Understanding bonus taxation helps with financial planning, ensuring you know how much of your bonus you'll actually receive after taxes.

4. Using the Calculator

Tips: Simply enter your gross bonus amount in USD. The calculator will show both the tax amount and your net bonus after tax.

5. Frequently Asked Questions (FAQ)

Q1: Is the bonus tax rate always 22%?
A: For bonuses under $1 million, yes. For amounts over $1 million, the rate increases to 37% for the portion above $1 million.

Q2: Are state taxes also withheld from bonuses?
A: Yes, most states also tax bonuses, though rates vary. This calculator only shows federal tax.

Q3: Can bonus tax be refunded if too much is withheld?
A: Yes, if too much tax is withheld, you may get a refund when you file your annual tax return.

Q4: Are bonuses taxed differently than regular income?
A: They're subject to different withholding rules but ultimately taxed as ordinary income on your tax return.

Q5: How are bonuses reported on W-2 forms?
A: Bonuses are included in Box 1 (Wages) along with your regular wages.