Bonus Calculator

How it works

A percentage bonus is a slice of your base salary paid on top of it. Multiply the base by the bonus percentage to get the payout, then add it back to see total pay.

With the defaults, 10% of a $60,000 salary is a $6,000 bonus, bringing total pay to $66,000. Both numbers are gross. Bonuses are usually withheld at a flat supplemental rate, so the amount that lands in your account is smaller than the headline.

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A worked example: a 10% bonus on $60,000

Your offer letter lists a $60,000 base and a 10% annual bonus, and you want to know what that percentage is worth. Ten percent of $60,000 comes to $6,000, paid on top of your regular salary.

That pushes your total pay for the year to $66,000. One thing to keep in mind: bonuses are usually taxed as ordinary income, and employer withholding often takes a larger upfront bite, so the amount that lands in your account will be smaller than the full $6,000.

The percentage matters more than it looks. A 5% bonus on that same salary would be $3,000, while 20% would be $12,000, a $9,000 spread from one line in the contract. Run your own base and bonus rate to see the payout.

Before you spend it

• Do not budget on it. Discretionary bonuses can shrink or vanish in a bad year, so keep your fixed costs covered by base pay alone.
• Mind the withholding. Bonuses are often withheld at a flat supplemental rate, which gets squared up against your real rate at tax time.
• Give it a job. A lump sum is a rare chance to fund an emergency buffer, knock down debt, or top up retirement before it disappears into everyday spending.

The kinds of bonuses you might be offered

Bonus is a catch-all word for very different kinds of pay. Some are earned by performance, some are sweeteners to get you in the door, and some are meant to keep you from leaving. Knowing which one you are looking at tells you how much to rely on it.

• Annual or performance bonuses reward the year’s results, often tied to company, team, or personal targets, and can swing widely from one year to the next.
• Signing bonuses are one-time payments to join, sometimes with a clawback if you leave inside a year or two, so read the strings attached before you count the cash.
• Retention bonuses pay you to stay through a merger, a busy season, or a key project, and usually vest only if you are still there on a set date.
• Spot and referral bonuses are smaller, ad-hoc rewards for a specific win or a good hire, welcome but rarely something to budget around.

How a bonus is withheld and taxed

The reason a bonus looks smaller in your account than on paper is withholding, and it helps to separate that from the tax you actually owe. The two are not the same, and any gap between them is settled when you file for the year.

• Supplemental withholding often applies a flat rate to bonus pay, separate from how your regular salary is withheld, which can feel steep in the moment.
• The aggregate method is the other common approach, where the bonus is lumped with a normal paycheck and withheld as if that larger amount were your usual pay.
• Payroll taxes still apply, so Social Security and Medicare come out of a bonus just as they do from your salary.
• It is trued up at filing. A bonus is taxed as ordinary income for the year, so over-withholding comes back as a refund and under-withholding leaves a bill.

Target bonus versus what actually lands

Many offers quote a target bonus, a percentage you hit if everything goes to plan. The real payout can land above or below it, and several rules decide where. Treat the target as a midpoint, not a promise you can bank on.

• Performance multipliers scale the target up or down with results, so a strong year might pay well over target and a weak one well under.
• Proration shrinks the payout if you joined partway through the year, since most plans pay only for the months you actually worked.
• Funding can cap the whole pool in a lean year, so even a personal win may pay less when the company as a whole underperforms.
• The payout date matters, because many plans require you to still be employed when the bonus is paid, not just when it was earned.

A bonus versus a raise

Given the choice, it is worth understanding how a one-time bonus stacks up against a permanent raise of the same size. They feel similar in the year they land, but over time the two part ways sharply.

• A raise compounds, since it lifts your base and every future percentage increase builds on the higher number, while a bonus is paid once and gone.
• A bonus is flexible for the employer, which is exactly why companies lean on it: it rewards a good year without locking in a higher cost forever.
• Weigh the trade, because a slightly smaller raise usually beats a slightly larger one-time bonus once you look a few years out.