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 and severance withholding: what to enter (2026)
The calculator accepts one planning withholding rate. Build that rate from the withholding that actually applies to the payment rather than assuming every bonus and severance check uses the same percentage.
| Payment | Federal income-tax withholding | Other payroll/state items |
|---|---|---|
| Separately identified supplemental wages, cumulative supplemental wages ≤ $1M | Employer may use the optional 22% flat method when IRS conditions are met, or the aggregate method | Social Security and Medicare generally still apply; state withholding varies |
| Supplemental wages above the $1M annual threshold | 37% mandatory rate applies to the excess above $1M | Payroll/state rules still apply |
| California bonus / qualifying stock-option supplemental wage | Federal rule above | California optional flat PIT withholding: 10.23%; 2026 SDI: 1.3% |
| California severance / overtime / commission paid separately | Federal rule above | California optional flat PIT withholding: 6.6%; 2026 SDI: 1.3% |
| Texas / Florida wage payment | Federal rule above | No individual state income tax on wages; federal payroll taxes still apply |
Social Security is 6.2% for employees up to the 2026 $184,500 wage base; Medicare is 1.45% with no wage cap, and employers begin withholding an additional 0.9% Medicare tax after paying an employee more than $200,000 in Medicare wages during the year. The calculator does not automatically track those wage-base thresholds.
Sources: IRS Publication 15 (2026) and California EDD 2026 rates and withholding.
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)
When supplemental wages are separately identified and the IRS conditions are met, an employer may use the optional 22% federal supplemental-wage withholding method on amounts within the applicable $1 million threshold. For supplemental wages above that threshold, the mandatory higher federal withholding rule applies to the excess. Social Security, Medicare, and state withholding can still apply, so 22% federal withholding is not the same thing as a 22% total deduction from the check.
The 22% withholding amount can be more or less than the federal income tax ultimately attributable to the bonus. Whether you receive a refund or owe additional tax depends on your entire return — including other income, withholding, estimated payments, deductions, and credits — not on the bonus withholding rate alone.
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 paid as wages is generally taxable wage income and is subject to federal income-tax withholding, Social Security, and Medicare. An employer may use supplemental-wage withholding rules when the payment is separately identified and the IRS requirements are met. The withholding on the check is a prepayment; final federal income tax depends on your total annual return.
State rules can differ from the federal rule. In California, for example, EDD distinguishes bonuses and stock options from other supplemental wages: the optional flat California PIT rate is 10.23% for bonuses/stock options but 6.6% for severance, overtime, commissions, and certain other supplemental wages. California SDI is 1.3% in 2026.
- Timing can matter: a large severance payment increases income in the year received and can affect marginal rates, credits, or deductions.
- FICA can matter: Social Security stops after the annual wage base, while Medicare has no wage cap.
- State treatment varies: do not assume a bonus withholding rate is also the correct severance withholding rate.
- Withholding is not final tax: over- or under-withholding is reconciled when the return is filed.
For a large package, deferred-payment agreement, settlement component, or other unusual arrangement, a qualified tax professional can help identify which amounts are wages and which rules apply.
Filing taxes with a bonus or severance this year?
Bonuses and severance can affect withholding and annual tax liability. These filing options can help report the wage income shown on your tax documents:
TurboTax↗ — guided filing for W-2 income that includes bonus or severance payments
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.
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- 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 and severance tax calculator: FAQs
Why are bonuses taxed at a higher rate?
Bonuses are not necessarily subject to a higher final federal income-tax rate. They can be withheld using supplemental-wage rules, which may make the paycheck look more heavily taxed than regular wages. Final tax liability is based on the annual tax return.
How are bonuses taxed in the United States?
Bonuses are wage income. When separately identified and the IRS conditions are met, employers may use the optional 22% federal supplemental-wage withholding method on supplemental wages up to the applicable $1 million threshold; the aggregate method is another possibility. Amounts above the threshold are subject to the mandatory higher withholding rule.
How is severance pay taxed?
Severance is generally taxable wage income and can be subject to federal income-tax withholding plus Social Security and Medicare taxes. State treatment varies. The withholding amount is a prepayment and can differ from final tax liability.
Does this calculator show actual taxes owed or just withholding?
It is a withholding/planning estimate based on the rate you enter. It does not calculate your complete annual tax return, deductions, credits, or every state rule.
Can I get some of the bonus or severance tax back?
Possibly. If withholding on the payment exceeds your final annual income-tax liability after all income, deductions, credits, and prior payments are considered, the difference can contribute to a refund. If too little was withheld, additional tax may be due.
Are bonuses and severance subject to Social Security and Medicare taxes?
Generally yes for wage payments. In 2026, employee Social Security is 6.2% up to the $184,500 wage base and Medicare is 1.45%; additional Medicare withholding rules can apply at higher wages.
Is bonus or severance pay taxed differently by state?
Yes. State withholding rules vary. California, for example, allows an optional 10.23% PIT withholding rate for bonuses and certain stock-option supplemental wages, but a 6.6% optional PIT rate for severance, overtime, commissions, and certain other supplemental wages; 2026 SDI is 1.3%. Texas and Florida do not impose individual state income tax on wages.
Is this calculator tax advice?
No. It is an informational estimate. Use official payroll/tax guidance or a qualified professional for decisions specific to your payment.