Year-End Bonus Calculator
Updated September 2026 · Free · No sign-up
Calculate your year-end or Christmas bonus after taxes — the 22% federal flat withholding, FICA, state tax, and the moves that legally shrink the December tax bite.
Quick answer: A $5,000 year-end bonus typically nets $3,300-3,600: 22% federal supplemental withholding + 7.65% FICA + state tax (~30-35% total). The heavier withholding is not a higher tax — it reconciles to your normal bracket when you file.
How Year-End Bonuses Are Taxed
Bonuses are supplemental wages: paid as a separate check, federal withholding runs at a flat 22% (37% on amounts above $1 million), plus Social Security 6.2% (below the wage base), Medicare 1.45%, and state tax. Two December-specific wrinkles: high earners may have already crossed the Social Security wage base (that 6.2% disappears — a real December discount), and the Additional Medicare 0.9% kicks in above $200k YTD.
Worked Examples
Example 1 — the standard $5,000. 22% + 7.65% + 5% = 34.65% withheld → $3,268 in hand. If your true bracket is 12%, ~$500 of that comes back as refund at filing.
Example 2 — with a 401(k) deferral. Same bonus, 20% deferral: $1,000 goes to retirement pre-tax, withholding applies to $4,000 → ~$2,614 cash + $1,000 invested. The max-out calculator tells you whether the room exists.
Example 3 — December vs January timing. Employers picking the payment date shift the tax year: a January 2 payment lands in next year's income — useful if you're retiring, taking leave, or expecting a lower bracket next year. You can't choose, but you can ask.
Withholding vs Reality (The Annual December Confusion)
The flat 22% is withholding, not your tax. File in April and the bonus is just income at your bracket — over-withheld comes back, under-withheld (rare below $200k) is owed. Full mechanics with the aggregate-method variant live in the bonus tax calculator; this page adds the year-end-specific angles.
Holiday Bonus Landscape (What's Normal)
| Type | Typical range |
|---|---|
| Year-end performance bonus | 5-15% of salary (role/level dependent) |
| Holiday/Christmas bonus (flat) | $100-2,500, or a week's pay |
| Retail/hospitality holiday season | Often hourly premiums instead — see holiday pay |
| Philippines | 13th month pay is statutory, not a bonus — separate math |
| India | Statutory/Diwali bonus rules — Diwali bonus calculator |
Five Legal Moves That Shrink the December Bite
- Route a slice through your 401(k): most plans apply your deferral % to bonus checks — bump it before the bonus pay date, restore it after (portal changes take 1-2 cycles: act in November).
- HSA top-up: bonus cash can fund remaining HSA room — deductible even when contributed directly.
- Check the wage-base bonus: if YTD earnings passed the Social Security wage base, your bonus already skips 6.2% — the calculator's FICA line overstates for you.
- Ask about timing when next year's income will be lower (sabbatical, retirement, parental leave).
- Don't chase deductions that cost more than they save — donating $1,000 to "save taxes" at 22% still costs $780.
If the Bonus Never Arrives
Promised-but-unpaid year-end bonuses sit on a spectrum: discretionary bonuses are generally not recoverable; formula-based or contractually promised ones are wages — the back pay route applies, and several states treat earned bonuses as final-pay items with penalties for non-payment.
Frequently Asked Questions
How much tax is taken from a year-end bonus?
Typically 30-35%: flat 22% federal supplemental withholding + 7.65% FICA + state tax. A $5,000 bonus nets around $3,300.
Are Christmas bonuses taxed differently than salary?
Withheld differently (flat 22% when paid separately), taxed identically at filing — the bonus is ordinary income at your bracket; excess withholding returns as refund.
Can I put my bonus in my 401(k)?
Most plans apply your deferral percentage to bonus checks — raise the percentage before the bonus pay date to shelter a slice pre-tax (check remaining room first).
Why is my December bonus missing Social Security tax?
If your year-to-date wages already passed the Social Security wage base, the 6.2% stops — bonuses late in the year often ride that discount.
Can my employer pay my bonus in January instead?
Employers control timing; a January date moves the income to next tax year. Worth requesting if your bracket will drop.
Is a cash holiday gift from my employer taxable?
Yes — cash and cash-equivalents (gift cards) are always taxable wages regardless of size. Only trivial non-cash gifts (a turkey, a mug) escape as de minimis.
✓ Formula verified • Last updated: September 27, 2026