What this calculator does
A year-end or holiday bonus can feel like a windfall, but taxes come out first and the rest is easy to spend without a plan. This calculator estimates what reaches your account after withholding, then lets you try a split between your emergency fund, credit card debt and savings and shows what each part does. The split is yours to choose: the calculator only shows the math.
Why a bonus check looks smaller
Bonuses are "supplemental wages". When a bonus is paid separately from regular wages, employers may withhold federal income tax at a flat 22% (37% on supplemental wages over $1 million in a year), and bonuses are also subject to Social Security and Medicare (IRS Publication 15). Withholding is not your final tax: the bonus is added to your income for the year, so you may owe more or get some back when you file. For a closer look, see the bonus tax calculator.
How the numbers work
- Withheld = bonus × (22% federal + 6.2% Social Security + 1.45% Medicare + your state rate). Untick Social Security if you have already reached the year's wage base.
- Each part of the split = the amount after withholding × your percentage; what is left goes to spending.
- Emergency fund in months = (fund now + new money) ÷ essential costs a month.
- Card interest avoided over a year = the amount paid toward the card × its APR.
An example
A $3,000 bonus with 5% state withholding: about $1,039.50 is withheld, so about $1,960.50 arrives. With a 40/40/20 split, $784.20 goes to the emergency fund (from $2,000 to $2,784.20, about 0.9 months of $3,000 essentials), $784.20 pays down a 22% APR card (about $172.52 of interest avoided over a year) and $392.10 goes to savings.
Things to think about
- An emergency fund protects against new debt when something unexpected happens: see the emergency fund calculator.
- Paying down a high-APR card saves its interest rate on that money; see the credit card payoff calculator.
- For retirement contributions before December 31, see the max out your 401(k) calculator.
- Planning holiday gifts too? Keep them inside your holiday budget.
Frequently asked questions
Why is so much taken out of my bonus?
When a bonus is paid separately, employers may withhold federal income tax at a flat 22%, plus Social Security and Medicare, and often state tax. Your actual tax is figured on your full-year income when you file.
Is a bonus taxed more than regular pay?
No, it is taxed as income like your pay. Only the withholding method can differ; any difference is settled on your tax return.
How should I split my bonus?
That depends on your situation. The calculator shows what each choice does, such as how many months your emergency fund would cover and the card interest you would avoid, but it does not tell you what to choose.
What if my percentages add up to more than 100%?
The calculator scales them down so they add up to 100% and shows a note.
Is my information saved?
No. The numbers stay in your browser and are not sent to us.