Are signing bonuses taxed?
Yes. A signing bonus is supplemental wages. Expect 22% federal withholding, 7.65% FICA and state tax to come out of the check.
What comes out
Federal income tax is withheld at 22% on supplemental wages up to $1,000,000. Social Security is 6.2% up to the wage base and Medicare is 1.45% on all of it. The state adds its own line. See your state on the bonus tax calculator.
Why it looks so high
Withholding assumes the bonus is taxed at 22%. If your income puts you in the 10% or 12% bracket, you will get the difference back at filing. Pick your state in the state paycheck calculators to see the full check.
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Questions
How much of a $10,000 signing bonus do I keep?
In a state with no wage tax, about $7,035 with the flat 22% method: $2,200 federal and $765 FICA come out.
Is a signing bonus taxed higher than salary?
The withholding rate is flat 22%, which can exceed your real bracket. The excess is refunded or applied when you file.
What if I have to pay it back?
Repayment rules depend on the year and the agreement. Keep your pay stub and ask a tax professional.