Bonus

iynna's profile thumbnail
Can you ask for a (fat) raise instead? That bonus tax hit differently.. ๐Ÿ˜ฌ
Oh really? Can you explain more about how the taxes work for bonuses?
jessicap's profile thumbnail
raises to your salary for one are taxed at your income rate see here: https://smartasset.com/taxes/current-federal-income-tax-bracketsand give you longer term benefits by raising your salary to that level "forever" and give you more power in future positions to increase your base salary.bonuses are taxed typically at 22% + additional rates depending on your state/ country: https://www.prudential.com/financial-education/tax-withholding-bonusspeaking from experience: a $55k bonus was about $35k actual cash hitting my account. a 36% tax rate in CA, USA when my normal income tax bracket at the time was 28%.source: CPA turned data scientist with a love of personal finance
iynna's profile thumbnail
Couldn't have said it better @jessicap, thank you!Bonus taxes are evil! :( I remember when I got one for the first time, I was so excited until it hit the bank account... my face was a big WTF :)
jessicap's profile thumbnail
ughh i know! it is so disappointing, isn't it?!?
brianarani's profile thumbnail
Getting a raise is also better because then that's your salary going forward vs a one-time bonus, although companies know this and that is usually why they are often more generous with the bonuses. Is it possible to speak with co-workers at your company as well to see what they're asking for?
You could ask, โ€œWhat is the bonus pool, and how many people will divide it?โ€ Also, you will lose about one-quarter to taxes, so keep that in mind. Itโ€™s not free money.