Bonus Gross Up Calculator
Figure out how much gross bonus you must pay so your employee receives a specific net bonus after taxes. Supports flat or detailed tax rates, pre-tax deductions, and employer cost.
Gross-Up Bonus Calculator
Amount the employee should receive after all taxes and pre-tax deductions.
Use this if you know the combined effective tax rate that will apply to the bonus.
Turn on if part of the bonus is reduced by pre-tax items (401(k), health insurance, etc.).
Gross-up summary
- Required gross bonus
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- Total taxes withheld
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- Effective tax rate
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- Employee net bonus
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- Total employer cost
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Tax breakdown
- Federal
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- State
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- Local
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- Social Security
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- Medicare
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- Other / supplemental
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- Pre-tax deductions
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How the bonus gross up calculation works
When you “gross up” a bonus, you increase the gross amount so that, after taxes and pre-tax deductions, the employee receives the exact net bonus you promised. Instead of the employee paying the taxes out of their bonus, the employer effectively covers those taxes.
Core gross-up formula
If you know the combined tax rate that will apply to the bonus, the math is straightforward. Let:
- \( N \) = desired net bonus
- \( t \) = combined tax rate (as a decimal, e.g. 0.30 for 30%)
- \( d \) = pre-tax deduction rate (as a decimal, optional)
Without pre-tax deductions
Gross bonus:
\[ G = \frac{N}{1 - t} \]
Taxes:
\[ \text{Taxes} = G \cdot t \]
With pre-tax deductions
First, pre-tax deductions reduce the taxable amount:
\[ \text{Taxable} = G \cdot (1 - d) \]
Taxes:
\[ \text{Taxes} = \text{Taxable} \cdot t = G \cdot (1 - d) \cdot t \]
Net bonus:
\[ N = G - \text{PreTax} - \text{Taxes} = G - Gd - G(1-d)t = G \cdot \bigl(1 - d - (1-d)t\bigr) \]
Solving for \( G \):
\[ G = \frac{N}{1 - d - (1-d)t} \]
This calculator applies the appropriate formula automatically based on the inputs you provide.
Flat vs. detailed tax rates
- Flat rate mode – Enter a single combined tax rate (for example, 30%). This is quick if you already know the effective rate your payroll system uses for supplemental wages.
- Detailed mode – Enter separate percentages for federal, state, local, Social Security, Medicare, and any other flat tax. The tool adds them up to get the combined rate.
In detailed mode, the combined tax rate is simply:
\[ t = t_\text{federal} + t_\text{state} + t_\text{local} + t_\text{SS} + t_\text{Medicare} + t_\text{other} \]
Step-by-step: using the bonus gross up calculator
- Enter the desired net bonus. This is what you want the employee to see on their paycheck after all withholdings.
- Choose the tax mode. Use flat rate if you know the combined rate; use detailed if you want to model each tax separately.
- Enter tax rates. Adjust the default percentages to match your jurisdiction and company policy.
- Optionally add pre-tax deductions. Turn on pre-tax deductions if the bonus is subject to 401(k), health, or other pre-tax items.
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Click “Calculate grossed-up bonus”. The
results panel will show:
- Required gross bonus
- Total taxes withheld and effective tax rate
- Employee net bonus (should match your target)
- Total employer cost (including optional employer-side extras)
Example: grossing up a $1,000 bonus
Suppose you want an employee to receive a net bonus of $1,000 and you estimate the combined tax rate at 30%.
- Net bonus \( N = 1{,}000 \)
- Combined tax rate \( t = 0.30 \)
Gross bonus:
\[ G = \frac{1{,}000}{1 - 0.30} = \frac{1{,}000}{0.70} \approx 1{,}428.57 \]
Taxes:
\[ \text{Taxes} = 1{,428.57} \times 0.30 \approx 428.57 \]
Net bonus:
\[ N = 1{,}428.57 - 428.57 = 1{,}000 \]
Limitations and practical notes
- Real payroll systems may apply different supplemental wage rules (flat federal rate, aggregate method, annualization, etc.).
- Social Security has a wage base limit; above that, the rate may drop to 0%.
- State and local rules can be complex and may treat bonuses differently from regular wages.
- This tool assumes a simple percentage-based withholding model and is intended for planning and educational use only.
Always confirm final numbers with your payroll provider, HR department, or a qualified tax professional before committing to compensation promises.
Frequently asked questions about bonus gross ups
Is a grossed-up bonus more expensive for the employer?
Yes. When you gross up a bonus, you are paying both the employee’s net bonus and the taxes that would normally be withheld from that bonus. If you also include employer-side payroll taxes or benefits, the total employer cost will be higher than the net amount the employee receives.
When do companies use grossed-up bonuses?
Common situations include relocation benefits, sign-on bonuses, spot bonuses, or special awards where the company wants to guarantee that the employee receives a clean round number (for example, “a $5,000 net bonus”).
Can I use this calculator outside the U.S.?
Yes, as long as you can approximate the total effective tax rate on the bonus. The calculator is currency-agnostic and works with any tax system that can be modeled as a percentage of taxable income.
Does this calculator handle regular salary gross ups?
Yes. If you choose “Per pay period” or “Annualized equivalent” under pay frequency, you can use the same logic to gross up recurring payments, not just one-time bonuses.