Bonus & Severance Tax Calculator: After-Tax Payout (2026)
Estimate how much of your bonus or severance pay you actually take home after tax. Enter the gross amount and an estimated withholding rate to see your after-tax payout instantly.
On this page: Calculator · Withholding rate table · How bonuses are taxed · Severance pay · FAQs
Gross payout: $
Estimated tax withheld: $
After-tax payout: $
Effective withholding rate: %
This is estimated withholding — not final tax owed. Actual tax is settled when you file your return. See how bonuses are taxed for details.
Bonus withholding rates: what to enter (2026)
The rate to use depends on your state and which withholding method your employer uses. Here are common total rates to enter in the calculator:
| Scenario | Federal Withholding | State (example) | FICA (approx.) | Total Estimate |
|---|---|---|---|---|
| Bonus in TX/FL/WA (no state tax) | 22% flat | 0% | ~7.65% | ~30% |
| Bonus in Colorado (4.4% flat) | 22% flat | ~4.4% | ~7.65% | ~34% |
| Bonus in New York (aggregate) | 22% flat | ~6% | ~7.65% | ~36% |
| Bonus in California (10.23% state flat) | 22% flat | 10.23% | ~7.65% | ~40% |
| Large bonus above $1M (federal 37%) | 37% flat | varies | ~2.35%* | ~45–50% |
*FICA on amounts above the $176,100 Social Security wage base drops to Medicare only (1.45% + 0.9% additional above $200k). These are withholding estimates — not final tax rates. Your actual tax bill is determined at annual filing. In California, enter approximately 40% for a typical bonus. In Texas, approximately 30%.
How bonuses are taxed in the US (2026)
Bonuses are ordinary income — they're taxed at the same federal brackets as your salary. The confusion comes from withholding, not the actual tax rate. Employers use one of two methods:
Flat rate method (most common)
The IRS flat supplemental withholding rate is 22% for bonus amounts up to $1 million. For amounts above $1 million, the rate is 37%. This method is simple and predictable — your employer withholds exactly 22% federal regardless of your actual bracket.
If your effective annual tax rate is lower than 22% (common for lower-income workers or part-year earners), the 22% withholding will generate a refund when you file. If your rate is higher than 22% (common for high earners), you may owe additional tax at filing.
Aggregate method
The employer combines your bonus with your most recent regular paycheck, calculates withholding on the combined amount using normal payroll tables, then subtracts the withholding already taken from the regular paycheck. This can result in higher withholding than the flat method for workers in higher brackets — the combined paycheck pushes into higher withholding territory.
Final tax: what actually matters
Regardless of which method your employer uses, your bonus is added to your total annual income on your tax return and taxed at your actual marginal rate. Withholding is just a prepayment. The calculator above estimates withholding — your true tax cost depends on your total income for the year.
To understand how your bonus pushes you into a higher bracket, see the marginal vs effective tax rate guide.
How severance pay is taxed
Severance pay is treated as ordinary income and is subject to the same federal income tax, state income tax, Social Security, and Medicare taxes as regular wages. Most employers withhold severance using the flat 22% federal supplemental rate, though large packages may use the aggregate method.
Key considerations for severance:
- Timing matters: Receiving a large severance in the same year as regular salary can push total income into a higher bracket. If possible, negotiate to defer part of the severance to a lower-income year.
- FICA applies: Social Security (6.2%) and Medicare (1.45%) apply to severance, unless the payment is specifically structured as damages rather than wages — an area where a tax professional can help.
- State treatment varies: Most states treat severance as regular income. California withholds at 10.23% flat. No-tax states (Texas, Florida, Washington) apply only federal withholding.
- Potential refund: If your severance is paid in a year where your total income is lower than usual, the 22% withholding may be more than your effective rate — generating a refund at filing.
For large severance packages or complex situations, consult a tax professional. For tax filing tools that handle severance, see TurboTax which handles supplemental income automatically.
Filing taxes with a bonus or severance this year?
Bonuses and severance can affect your bracket, withholding, and refund. These tools handle supplemental income automatically:
- TurboTax — handles bonus, severance, and supplemental income W-2 filing automatically
- FreeTaxUSA — free federal filing for W-2 workers including bonus and severance income
Affiliate links — we may earn a commission at no cost to you.
Related calculators
- After-tax paycheck calculator Estimate net pay per check after taxes — for any gross pay amount and frequency
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- Take-home pay calculator Full after-tax breakdown using actual 2026 federal and state brackets — all 50 states
- Windfall & settlement tax calculator Estimate taxes on large one-time payments — lottery, lawsuit settlements, inheritances
- Marginal vs effective tax rate guide How a bonus can push you into a higher bracket without taxing all your income at that rate
Bonus & severance tax calculator FAQs
Why are bonuses taxed at a higher rate?
Bonuses are not necessarily taxed at a higher rate, but they are often withheld at a higher rate. Employers using the flat supplemental method withhold federal tax at 22% regardless of your regular bracket. This affects withholding — not the final tax owed. If 22% withholding is more than your effective annual rate, you receive a refund at filing.
How are bonuses taxed in the United States?
Bonuses are supplemental income taxed as ordinary income at the same federal brackets as salary. Employers choose between two withholding methods: the flat rate method (22% federal for amounts under $1 million) or the aggregate method (bonus added to most recent paycheck and withheld at the resulting rate). Final tax owed is determined at annual filing based on total income.
How is severance pay taxed?
Severance pay is taxable income subject to federal income tax, state income tax, Social Security (6.2%), and Medicare (1.45%). Employers typically withhold using the flat supplemental rate (22% federal) or aggregate method. Large severance packages above $1 million are withheld at 37% federal.
Does this calculator show actual taxes owed or just withholding?
This calculator estimates tax withholding — not your final tax bill. Actual taxes owed are determined when you file your tax return based on total annual income. If withholding exceeds your actual liability, you receive a refund. If it falls short, you owe the difference.
Can I get some of the bonus or severance tax back?
Yes. If the flat 22% withholding rate exceeds your effective annual tax rate — common for lower-income workers or those who received a bonus in a low-income year — you receive a refund when you file. The withholding is a prepayment. Your actual tax bill is settled at annual filing.
Are bonuses and severance subject to Social Security and Medicare taxes?
Yes. Bonus and severance payments are subject to Social Security tax (6.2% up to the $176,100 wage base in 2026) and Medicare tax (1.45% with no cap, plus 0.9% additional above $200,000 for single filers). These FICA taxes apply on top of federal and state income tax withholding.
Is bonus or severance pay taxed differently by state?
Yes. California withholds bonuses at a flat 10.23% state rate. New York uses the aggregate method. Texas, Florida, and Washington have no state income tax — bonus and severance withholding is federal only. Most other states treat bonuses as regular income and withhold at normal payroll rates. See the withholding table above for common total rate estimates by state.
Is this calculator tax advice?
No. This calculator provides estimates for informational purposes only and does not constitute tax, legal, or financial advice. Consult a qualified tax professional for guidance specific to your situation.