Signing Bonus Calculator

Maya accepted a role with a $20,000 signing bonus and mentally spent it before her first day: moving costs, a deposit, paying down a card. Then the deposit hit, and it was $13,420. Where did the other $6,580 go? Nobody told her the part the recruiter leaves out.

Signing bonuses are supplemental wages, and the IRS lets employers withhold them at a flat 22% federal rate (37% on any amount above $1 million). On a $20,000 bonus, that's $4,400 to federal income tax alone. Then Social Security (6.2%) and Medicare (1.45%) take another 7.65%, or $1,530. Add state income tax, and a worker in a 5% state loses another $1,000. That's the gap between the offer letter and your bank balance.

Here's the part that stings the most: 22% is a withholding rate, not your final tax rate. If your actual marginal bracket is higher, you'll owe more at filing. If it's lower, you get some back as a refund. The bonus simply gets stacked on top of your regular income for the year, and the real bill is settled in April.

The math they hope you never run is the clawback. Most signing bonuses come with a repayment clause: leave within a set window, typically one to two years, and you owe some or all of it back. Worse, you often repay the gross $20,000, not the $13,420 you netted, because the taxes you already paid are between you and the IRS, not your employer. Quit at month 11 of a 12-month clawback and you could be writing a check for the full amount while only ever having held two-thirds of it.

This calculator does the subtraction the recruiter skipped. Enter your gross bonus, your withholding assumptions, and your clawback window, and see three numbers that actually matter: what hits your account, what you'd owe if you left early, and the net cost of walking away before the clawback expires.