Indiana bonus tax calculator

The complaint about bonus tax is always the same: it looked like half of it vanished. Usually it did not. The federal rule for supplemental wages is a flat 22% withholding rate, and most of the rest of the gap is Social Security and Medicare, which come out of a bonus exactly as they come out of salary.

The tool above shows each of those lines separately so you can see which one took what. It also makes clear where the number stops being reliable.

Why is my bonus withheld at 22%?

Because the IRS treats a bonus as supplemental wages, and the percentage method applies a flat 22% federal withholding rate to them rather than running them through your usual bracket. It is a withholding convention, not a separate tax on bonuses. Anything withheld beyond your actual liability is refunded when you file.

The three inputs are Bonus amount, Wages already paid this year and State.

How this calculator works

Four deductions come off the bonus.

Federal withholding uses the percentage method. The first $1,000,000 of the bonus is withheld at 22%, and anything above that is withheld at 37%. For almost every reader the whole bonus sits in the 22% band.

Social Security is 6.2% of the bonus, but only on the part that still fits under the $184,500 wage base for 2026. This is what the year-to-date wages field is for: the engine subtracts your year-to-date wages from the wage base and charges 6.2% on the smaller of the bonus and what remains. Enter $180,000 of year-to-date wages against a $12,000 bonus and only $4,500 of it attracts Social Security.

Medicare is 1.45% of the whole bonus with no cap and no interaction with the year-to-date figure.

State income tax is applied only for flat-rate states, and deliberately without any state standard deduction. The reasoning is that a state annual allowance has already been used up by your salary, so applying it again to a marginal payment such as a bonus would understate the withholding. States with no wage income tax return zero. States with graduated brackets return "not calculated", because the site publishes their top marginal rate rather than a full bracket table, and applying a top rate to a bonus would overstate the bill.

What does a real bonus look like after withholding?

A $12,000 annual bonus paid to a Pennsylvania employee who has already been paid $60,000 in wages this year.

That is 32.72% withheld and 67.28% kept. Nothing close to half, and no part of it is a penalty for earning a bonus.

What happens once I pass the Social Security wage base?

The 6.2% line shrinks and then disappears. Social Security stops at $184,500 of wages in 2026, so a bonus paid late in a high-earning year is cheaper in FICA terms than the same bonus paid in January.

In the right-hand column only $4,500 of the bonus fits under the wage base, so Social Security is 6.2% of $4,500 rather than of $12,000. The state line is zero because that column uses Texas. Medicare does not stop, which is the part people forget.

Is 22% more or less than I actually owe?

It depends entirely on your marginal rate. For a single filer whose taxable income sits in the 12% band, 22% withholding is too much and the excess returns as a refund. For a filer in the 24% band or above, 22% is too little and the shortfall shows up as a balance due in April.

Compare the withholding rate against your position in the 2026 federal brackets. A single filer with $90,000 of income has a 22% marginal rate and a 22% withholding rate on the bonus, so the two happen to line up. A single filer with $150,000 of income has a 24% marginal rate, and each $10,000 of bonus is under-withheld by roughly $200.

The deeper explanation of both withholding methods is in how bonuses are taxed.

How do I use it, step by step?

1. Enter the gross Bonus amount from the award letter, before anything is taken off.
2. Enter Wages already paid this year as your year-to-date gross from the last pay stub before the bonus. This drives the Social Security cap only.
3. Select your State. If the state line comes back as "not calculated", the take-home shown is before state tax and is too high.
4. Read the federal line as withholding, not tax.
5. Compare the total withheld against your marginal rate to work out whether you should expect a refund on this money or a bill.
6. If you are deferring part of the bonus into a 401(k), subtract that from the bonus amount before entering it, since the tool has no deferral field.

What is the aggregate method?

The alternative way employers can withhold on a bonus. Instead of applying a flat rate, payroll adds the bonus to your regular pay for that period, works out the withholding as if that combined amount were your normal pay every period, subtracts what would have been withheld on the regular pay alone, and withholds the difference.

The effect is usually heavier withholding in the period the bonus lands, because a single inflated paycheck looks like a much higher annual salary to a withholding table. A $12,000 bonus arriving alongside a $2,500 regular check gets treated momentarily as though you earned $14,500 every two weeks.

None of that changes your tax. It changes the timing of the cash, and any excess comes back at filing. This tool models the percentage method only, so if your employer uses the aggregate method the take-home shown will be too high. Payroll will tell you which one they run.

Common mistakes

Calling the 22% a bonus tax rate. It is a withholding rate for supplemental wages. Your bonus is ordinary income taxed at your ordinary rates when you file, and the flat rate is simply what the employer sends in the meantime.

Entering the net bonus. The field wants gross. Entering the amount that landed in your account produces a second round of withholding on money already withheld.

Leaving year-to-date wages at zero when you are a high earner. The tool then charges 6.2% Social Security on the whole bonus. If your year-to-date wages are already past $184,500, the correct Social Security line is zero and the take-home shown will be understated.

Expecting the year-to-date field to change the federal withholding. It does not. It only affects the Social Security line. Federal withholding stays at 22% no matter what you type there, because the percentage method does not look at your other pay.

Assuming a "not calculated" state means no state tax. It means the site does not hold a bracket table for that state, not that nothing is withheld. Only states with no wage income tax return an actual zero.

Where this tool stops

It models the percentage method only. Some employers use the aggregate method instead, adding the bonus to a regular paycheck and withholding as if that combined amount were your normal pay. Aggregate withholding is often much heavier in the period it lands, and this tool will not match it.

It applies the 37% supplemental rate only to the portion of the single bonus you enter that exceeds $1,000,000. It does not track supplemental wages paid earlier in the year, so someone receiving several large bonuses will find the tool understates withholding on the later ones.

It applies the additional 0.9% Medicare surcharge once your wages for the year pass $200,000 single or $250,000 filing jointly, which is what the wages-already-paid field is for, but it has no field for a 401(k) deferral out of the bonus. Deferring bonus money into a traditional plan reduces the income tax on it but never the FICA, and the 2026 contribution limits cap how much can go that way.

Before the bonus lands

• Check with payroll whether they use the percentage or aggregate method
• Get your year-to-date gross wages from your most recent pay stub
• Work out your marginal rate so you know whether 22% is over or under
• Decide before payday whether any of it goes into a traditional 401(k)
• Check whether your state withholds supplemental wages at a special rate
• If you expect to be under-withheld, plan for the balance due rather than being surprised
• Keep the award letter, since the gross figure is what appears on your W-2

The 22% supplemental rate and the $1,000,000 threshold are stable from year to year, but the Social Security wage base rises with average wages every January, which moves the point at which the 6.2% line stops. The FICA explainer tracks the current figure.