New job bonus
How signing bonus tax works in 2026
A signing bonus — also called a sign-on bonus — is a lump sum paid when you accept a new job. The IRS treats it as supplemental wages, which means federal income tax is withheld at a flat 22% (37% on the portion above $1 million). FICA taxes apply on top: 6.2% Social Security up to the $184,500 wage base (SSA 2026) and 1.45% Medicare with no cap.
How much do you actually keep?
After federal withholding (22%), FICA (7.65%), and state income tax (0% to 13.3%), you typically take home 55% to 70% of a signing bonus. A $10,000 bonus in a state with a 5% income tax rate nets roughly $6,535 after withholding. In a no-income-tax state like Texas or Florida, the same bonus nets about $7,035.
| Signing bonus | Fed + FICA | State (5%) | Net take-home |
|---|---|---|---|
| $5,000 | $1,483 | $250 | $3,268 |
| $10,000 | $2,965 | $500 | $6,535 |
| $25,000 | $7,413 | $1,250 | $16,338 |
| $50,000 | $14,825 | $2,500 | $32,675 |
Withholding estimates: 22% federal + 6.2% SS + 1.45% Medicare + 5% state. Actual tax at filing may differ.
Flat rate vs. aggregate method
Employers can withhold using the flat 22% supplemental rate or the aggregate method, which combines the bonus with your regular paycheck and withholds on the combined total. The aggregate method often withholds more because it temporarily treats the combined amount as if you earn that much every pay period. Either way, your actual tax bill at filing is the same — the difference is only in withholding, and any excess is refunded.
Timing and tax year
If you start a job in late December and receive the signing bonus in your first paycheck in January, the bonus falls in the next tax year. This can be an advantage if your income is lower in the new year, potentially landing the bonus in a lower bracket. Discuss timing with your new employer if a year-end start date is possible. Use our bonus tax calculator for additional scenarios.
Questions
Signing bonus tax FAQ
How much tax is taken out of a signing bonus?
A signing bonus is treated as supplemental wages. Federal income tax is withheld at a flat 22% (37% on amounts above $1 million). FICA adds 6.2% Social Security (up to the $184,500 wage base in 2026) and 1.45% Medicare. Combined with state tax, total withholding typically ranges from 30% to 42% of the gross bonus.
Is a signing bonus taxed differently than salary?
The withholding method differs, not the tax rate. Employers can use the flat 22% supplemental rate or the aggregate method (combining the bonus with your regular pay and withholding on the total). Your actual tax rate at filing is the same marginal rate that applies to all your ordinary income — signing bonuses are not taxed at a special rate.
Do I have to pay back a signing bonus if I leave early?
Usually yes, if your offer letter includes a clawback clause. Most signing bonuses require you to stay for 1 to 2 years; if you leave before that, you must repay all or a prorated portion. The repayment is typically based on the gross amount, even though you received less after taxes. You can claim a tax deduction for the repaid amount in the year you repay it.
Can I reduce taxes on a signing bonus?
You cannot change that the bonus is taxable, but you can offset it. Maximizing pre-tax 401(k) or HSA contributions in the year you receive the bonus lowers your taxable income. If the 22% flat withholding exceeds your actual marginal rate, you will receive the excess as a refund at filing time.
When is a signing bonus paid?
Most signing bonuses are paid as a lump sum on your first paycheck or within 30 to 90 days of your start date. Some employers split the bonus into two payments — half at start, half after a probationary period. The timing affects which tax year the bonus falls in, which can matter if you start near year-end.
- Sources: IRS Rev. Proc. 2025-32 (22% supplemental withholding) · SSA 2026 wage base $184,500 · IRS Publication 525 (bonus repayments).
- 🔄 Last updated July 25, 2026 · Tax year 2026
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