Bonus Tax Gap: Will You Owe or Get a Refund?
Example: Bonus amount (gross): 25000 $ · Regular W-2 income this year (pre-bonus): 120000 $ · Federal tax already withheld from regular paychecks: 22000 $ · Bonus withholding rate your employer used: 22 % · Filing status (1=Single, 2=Married filing jointly): 1
| Expected refund (positive) or amount owed (negative) | $3,162 |
| True federal tax on total income | $24,339 |
| Total federal tax withheld | $27,500 |
| Withheld from bonus specifically | $5,500 |
Worked example
A $25,000 bonus on top of $120,000 salary (single filer) = $145,000 total income. After the $14,600 standard deduction, taxable income is $130,400. True federal tax: roughly $25,800. Salary withholding of $22,000 plus bonus withholding of $5,500 (22%) = $27,500 total withheld. Refund: about $1,700. But swap in a $200,000 salary and the bonus pushes you to the 32% bracket — and underpayment switches to a $2,400 tax bill.
Frequently asked questions
What is the supplemental withholding rate and why does it differ from my actual rate?
The IRS supplemental wage rate is 22% on amounts up to $1 million (37% above that). It is a simplified flat-rate deposit designed for easy payroll processing — it does not reflect your actual marginal rate, which is based on all your income for the year. The difference settles at filing.
Can I ask my employer to withhold more from my bonus?
Yes — you can submit an updated W-4 requesting additional withholding, or ask your employer if they can withhold at your actual marginal rate. Some payroll systems allow this; others apply the flat 22% automatically. Withholding extra from regular paychecks in advance is an alternative.
What happens if I significantly underpay during the year?
If you owe more than $1,000 in additional taxes and have not withheld or paid at least 90% of your current-year tax (or 100% of last year's), the IRS may impose an underpayment penalty. Paying estimated quarterly taxes after receiving a large bonus prevents this.
Does this calculator include state income tax withholding?
No — the calculation covers federal income tax only. State bonus withholding rules vary; some states use a flat rate, others use the same supplemental method as the IRS. Add your state rate to the gap calculation for a complete picture.