The short answer
A signing bonus is supplemental wages, so it is usually withheld at a flat federal rate of 22%, plus whatever state withholding applies. Write it as one formula: net bonus = gross × (1 − federal rate − state rate). With $10,000.00 gross, 22% federal and 5% state, the combined rate is 27%, and $10,000.00 times 73% is $7,300.00. Keep the two taxes separate all the way through, because the federal and state figures are reported separately, and a single combined total hides which side is wrong if a payslip disagrees.
Step 1: Start with the gross bonus
Start with the gross figure in the offer letter, before any withholding. That is the number the employer promised, and it is the number every rate multiplies. In this guide the gross is $10,000.00. Watch for two traps here. First, a bonus quoted as a round number in an offer may be paid in instalments, and each instalment is withheld separately, so the yearly total still adds up but no single payslip shows the full $10,000.00. Second, a bonus described as a gross-up is different: the employer pays the tax as well, so the net equals the promised figure and the gross is higher — if the offer says the bonus is grossed up, this guide's arithmetic does not apply directly.
Step 2: Work out the federal tax
Multiply the gross by the federal withholding rate. For most bonuses that rate is 22%, the flat supplemental rate, so $10,000.00 times 22% is $2,200.00. The 22% rate applies to supplemental wages up to $1 million in a year; above that, the excess is withheld at 37%, which is why the 37% branch in the calculator shows a $10,000.00 bonus keeping only $5,800.00. Some employers instead aggregate the bonus with regular pay and withhold from the wage tables, which can come out higher or lower than 22% — if your payslip shows a federal figure far from 22% of the bonus, aggregation is the likely reason, and the calculator's rate field lets you put the actual rate in.
Step 3: Work out the state tax, then subtract both
Multiply the gross by the state withholding rate, then add the two taxes and subtract from the gross. Here the state rate is 5%, so $10,000.00 times 5% is $500.00, the total tax is $2,200.00 plus $500.00, which is $2,700.00, and the net bonus is $10,000.00 minus $2,700.00, which is $7,300.00. State rules vary widely: some states withhold nothing on bonuses, in which case the state rate is 0 and the same bonus keeps $7,800.00, while others use their own flat or table rates. If you live in one state and work in another, the withholding state is usually the work state, and the home state settles the difference at filing time.
Step 4: Remember that withholding is not the final tax
The $7,300.00 is what reaches your bank account, not necessarily what the bonus finally costs in tax. The 22% federal withholding is an estimate collected at payment time, and the tax you finally owe depends on your total income for the year, your filing status and your deductions. If your marginal rate is below 22%, part of the $2,200.00 comes back as a refund; if it is above 22%, filing time brings an extra bill on the same bonus. Budget the $7,300.00 as spendable, but do not treat the $2,700.00 as settled until the return is filed. The same caution applies to the state side, where a credit for taxes paid to another state often adjusts the final figure.
Working backwards
The same formula runs backwards. To find the federal rate for a target net, divide the target by the gross and subtract from one, then subtract the state rate: $7,000.00 divided by $10,000.00 is 70%, one minus 70% is 30%, and 30% minus the 5% state rate is a 25% federal rate. To find the state rate for a target net, do the mirror calculation: $7,500.00 divided by $10,000.00 is 75%, one minus 75% is 25%, and 25% minus the 22% federal rate is a 3% state rate. And to stay under a tax cap, divide the cap by the combined rate: $3,000.00 divided by 27% is $11,111.11, so in $100 steps the largest bonus taxed at or below $3,000.00 is $11,100.00, taxed $2,997.00, while $11,200.00 would be taxed $3,024.00 and overshoot.
Common mistakes
The most common mistake is budgeting the gross figure. A $10,000.00 bonus sounds like $10,000.00 of spending power, but $7,300.00 is what arrives, and plans made on the gross figure come up $2,700.00 short. The second mistake is forgetting the state side entirely, which overstates the net by the full state amount — $500.00 on the defaults. The third mistake is treating the withholding as final and spending a refund that never comes, or ignoring an extra bill that does. The fourth mistake is applying the wrong federal rate: 22% is the supplemental rate, but an aggregated bonus follows the wage tables instead, and a bonus over $1 million in a year is withheld at 37% on the excess.
Frequently asked questions
How much tax is taken from a $10,000 signing bonus?
$2,700.00 at 22% federal and 5% state. $2,200.00 federal plus $500.00 state, leaving $7,300.00 net.
What federal rate gives $7,000.00 net on $10,000.00?
25% at 5% state. At 24% the net is $7,100.00; at 26% it is $6,900.00.
What state rate gives $7,500.00 net on $10,000.00?
3% at 22% federal. At 2% the net is $7,600.00; at 4% it is $7,400.00.
Is the withholding the final tax on the bonus?
No. Withholding is an estimate; the final tax depends on total yearly income and is settled when you file.
Try it on your own offer: put your gross bonus and your federal and state rates into the signing-bonus-calculator, and check the federal and state taxes separately against your payslip.