1. What Is Federal Bonus Tax?

Federal bonus tax is a flat tax rate of 22% applied to bonus income in the United States. This supplemental withholding rate is separate from regular income tax withholding and is designed to cover the tax liability on bonus payments.

2. How Does The Calculator Work?

The calculator uses the federal bonus tax equation:

Where:

• \( T \) — Federal bonus tax amount (dollars)
• \( B \) — Bonus amount (dollars)
• \( 0.22 \) — Federal bonus tax rate (22%)

Explanation: The calculation applies a flat 22% tax rate to the bonus amount to determine the federal tax withholding.

3. Importance Of Bonus Tax Calculation

Details: Accurate bonus tax calculation helps employees understand their take-home bonus pay and employers comply with IRS withholding requirements for supplemental wages.

4. Using The Calculator

Tips: Enter the bonus amount in dollars. The value must be greater than zero. The calculator will compute the federal tax withholding at the standard 22% rate.

5. Frequently Asked Questions (FAQ)

Q1: Is the bonus tax rate always 22%?
A: For most employees, the federal supplemental withholding rate is 22%. However, if the bonus exceeds $1 million, the excess amount is subject to a 37% rate.

Q2: Is bonus tax withheld differently from regular income?
A: Yes, bonuses are considered supplemental wages and are subject to different withholding rules than regular wages under IRS guidelines.

Q3: Can I adjust my bonus tax withholding?
A: While the standard rate is 22%, you may need to make estimated tax payments or adjust your W-4 if this withholding doesn't cover your actual tax liability.

Q4: Do states also tax bonuses?
A: Yes, most states also tax bonus income, though rates and methods vary by state. This calculator only covers federal tax.

Q5: When is bonus tax due?
A: Bonus tax is typically withheld by your employer when the bonus is paid. You'll settle any difference between withholding and actual tax liability when filing your annual tax return.