Bonus Calculator

In India, a bonus is added to your salary income and taxed at your slab rate. There's no separate "bonus tax" rate — but if it pushes you into a higher slab, the marginal portion gets taxed higher. TDS is usually deducted in the month the bonus is paid, often at a higher percentage that month, which makes it feel like a punishment. The actual tax due over the financial year is settled in your final salary slips. Reinvest part of the bonus into 80C instruments (PPF, ELSS) to reduce taxable income. The calculator estimates net bonus after tax.

When a bonus is paid, the employer often calculates TDS on the assumption that this month's income is your regular monthly income annualised — making it look like you're earning much more for the year. So they withhold a higher percentage. It feels like a penalty but it's just bunched-up TDS. Over the full year, it averages out, and you may even get a refund or smaller TDS in subsequent months. Ask your payroll team for an annual tax projection if you want to plan around this. The calculator gives a realistic view of net bonus after annual tax.

It depends on your tax slab. In India, if you fall in the 30% slab, expect about 30-35% of your bonus to go to tax (including cess). Add any state-specific deductions and you'll take home roughly 65-70% of the gross bonus. Example: ₹2 lakh gross bonus in the 30% slab → take-home around ₹1.36 lakh. Section 80C deductions (if not already maxed) can reduce this. PPF, ELSS, NPS contributions help. For US employees, federal supplemental withholding plus state and FICA can take 30-40% off. The calculator gives a slab-based estimate.

Bonus and salary are taxed at the same slab rates in India — there's no special "bonus tax." However, the timing of TDS deduction makes bonuses feel taxed more heavily in the month received. Internationally, in the US for example, bonuses are subject to "supplemental wage" withholding rates (22% federal flat for most), which is sometimes higher than your effective rate, leading to a refund later. The total tax you actually owe is determined at year-end based on your annual income. The calculator shows the realistic post-tax bonus figure.

In the US, supplemental wages (bonuses, commissions, severance) are typically withheld at a flat 22% federal rate up to $1 million, then 37% above that. State withholding rules vary — some states have flat supplemental rates, others use regular rates. FICA (Social Security 6.2% + Medicare 1.45%) still applies. So a $10,000 bonus might see roughly $2,200 federal + $765 FICA + state tax withheld upfront. Your actual tax liability could differ — adjustments happen when you file your return. This is the most common reason people see big refunds or surprises in tax season.

Take the gross bonus, subtract federal income tax (often 22% flat for supplemental wages), then state tax (varies — California 10.23% supplemental, Texas 0%, etc.), then FICA (7.65%). On a $5,000 bonus in California: $5,000 − $1,100 (fed) − $511 (CA) − $383 (FICA) = approximately $3,006 net. That's about 60% take-home. State taxes drive most of the variation. If you contribute the bonus to a 401(k), you reduce taxable income and increase net retained value through deferred taxes. The calculator can run various state and contribution scenarios.

Yes, contributing your bonus to a 401(k) (US) or NPS/PPF (India) is one of the smartest ways to reduce immediate tax. In the US, every dollar going pre-tax into a 401(k) skips federal and state income tax (FICA still applies). On a $10,000 bonus in the 24% bracket plus 5% state, you'd save around $2,900 in immediate tax by routing it into 401(k). It also keeps your overall income out of higher brackets. In India, NPS (Section 80CCD-1B) gives an extra ₹50,000 deduction. Always check 401(k) match implications too — don't lose match by skipping payroll contributions.