Bonus vs. Raise Calculator
Compare a one-time bonus against a salary raise after 2026 supplemental withholding, FICA, and 401(k) match, and find the year the raise wins.
Bonus vs. Raise Calculator
The two offers
Enter your salary, the bonus, and the raise. Everything recalculates as you type.
Prefilled from your state as a representative marginal rate. Edit it if you know your exact bracket.
Enter your current salary to compare.
The bonus
The raise
Assumptions. Nominal, undiscounted dollars: no investment return is applied to the bonus and no inflation discount to the raise. 2026 tax law, brackets, and the $184,500 wage base are held constant across every horizon year. You are assumed to contribute enough to earn the full employer match, and the match is counted at face value as pre-tax retirement money, so it is not tax-affected. The bonus is paid on top of a full year of salary, so the year-to-date wage position when it is taxed is your current salary. The standard deduction applies, with no itemizing and no pre-tax deferrals. Both paths receive the same annual merit growth, so the raise path always sits a fixed percentage above the no-raise path. Employer withholding of the 0.9% Additional Medicare tax starts at a flat $200,000 of wages from one employer, while this tool models the liability thresholds by filing status. State tax uses one representative marginal rate, applied only to the incremental dollars. Estimates for tax year 2026. Withholding, not tax advice.
| Year | Gross raise | Raise after tax | Employer match | Raise cumulative | Bonus cumulative | Running difference |
|---|---|---|---|---|---|---|
| Enter your current salary to see the year-by-year comparison. | ||||||
A bonus is money once. A raise is money every year.
The two offers look comparable on paper, but they are different shapes. A bonus is a single after-tax number that lands and then stops. A raise is a stream that keeps paying and grows while it pays, because next year's percentage merit increase is calculated on the higher base. Comparing them means valuing a lump sum against a growing annuity. That is what the calculator above does.
Take the default scenario: $85,000 salary, single filer in California, a $6,000 bonus against a 3% ($2,550) raise, a 4% employer match, and 3% annual merit increases on both paths. The bonus is worth about $3,660 after tax with no match (most plans exclude bonus pay). The raise nets roughly $1,560 in year one plus a $102 match, and it grows every year after that. The cumulative raise passes the bonus in year 3, about 2 years and 2 months in. By year five the raise has delivered around $8,800 against the bonus's $3,660, roughly $5,100 ahead.
The raise also lifts things the bonus never touches: the base your future percentage increases are computed on, the pay your 401(k) match is a percentage of, and everything else pegged to base salary (disability coverage, severance formulas, the number you quote in your next negotiation). The bonus is the better ask in narrower cases. You expect to leave inside the break-even window, or the company has a hard freeze on base pay, or you need the cash for something with a date on it. If the choice is buried inside a full offer with equity and benefits, run it through the Total Compensation Offer Calculator instead.
The 22% on your bonus is withholding, not a tax rate
This is the biggest misconception in the whole bonus-versus-raise question. When an employer pays supplemental wages separately, it may use the percentage (flat) method from IRS Publication 15: 22% federal withholding on supplemental pay up to $1,000,000 in a calendar year, and 37% on anything above that. Those are withholding percentages, a prepayment against your annual return, not the rate your bonus is taxed at.
At filing, the bonus is pooled with the rest of your income and taxed at your real progressive rate. If your marginal rate is 12%, the 22% flat withholding over-collected and the excess comes back as a refund. If you sit in the 24% bracket or higher, it under-collected and you owe the difference. The results panel shows the cash that actually hits the paycheck, the value after the return settles, and the true-up between them. In the default scenario the two happen to match almost exactly, because a single filer at $85,000 is already in the 22% bracket. Push the salary into the 24% bracket and the refund line flips to a balance due.
FICA works differently: that part really is final. Social Security takes 6.2% up to the $184,500 wage base, Medicare takes 1.45% with no cap, and wages above $200,000 (single) or $250,000 (married filing jointly) pay an extra 0.9%. None of it trues up at filing. For state-by-state supplemental withholding rates on the bonus itself, use the Bonus Tax Take-Home Calculator, and for the marginal-versus-average distinction the 22% confusion rests on, see the Marginal vs. Effective Tax Rate Calculator.
What actually moves the break-even year
Bonus size relative to the raise is the dominant term. A bonus three times the annual raise pushes break-even out toward year three or four. A bonus roughly equal to the raise breaks even in year one. Expected future merit increases come second: at 0% the raise is flat forever and break-even is close to bonus divided by raise, while at 3% or 5% the raise grows each year and the crossover arrives noticeably sooner.
The employer match is the quiet lever. When the plan excludes bonus pay from the match formula, which many plans do, the bonus loses a chunk of value that the raise collects every single year, and break-even moves earlier. Toggle the checkbox to see the size of that effect on your own numbers, or open the 401(k) Paycheck Impact Calculator for the contribution side.
Two tax kinks matter less than people expect. Crossing the $184,500 Social Security wage base raises the keep rate on the dollars above it, which helps whichever side crosses. State tax scales both sides roughly proportionally, so moving from Texas to California changes the dollar amounts a lot and the break-even year barely at all. For negotiating: if the tool says year 2, ask for the raise and let the bonus go. If it says year 8, the bonus is a defensible ask. For a deeper look at just the raise side, the Raise Net Take-Home Impact Calculator breaks a single raise down line by line.
Model both offers as saved profiles
This page applies a single representative state marginal rate. A real paycheck runs your state's own brackets plus state-specific items like CA SDI or NY PFL, your W-4 entries, and your pre-tax deductions. The Stub44 Salary Calculator app builds all of that per profile, so you can hold "today", "with the bonus", and "with the raise" as three saved profiles and flip between them. The period grid shows each one weekly through yearly. Download the Stub44 Salary Calculator app to compare the two offers against your actual paycheck.
Frequently Asked Questions
Common questions about bonus vs. raise calculator
Is a bonus or a raise better?
Over almost any horizon longer than a year or two, the raise. A bonus is paid once. A raise is paid every year. It also lifts the base that future percentage merit increases are calculated on, and it raises the pay your employer's 401(k) match is a percentage of. This calculator finds the exact year the raise's cumulative after-tax value passes the bonus. A bonus only wins if you expect to leave soon, or the company genuinely cannot move base pay, or you need the lump sum for something specific right now.
Why is my bonus taxed more than my raise?
It is not taxed more, it is withheld more. Employers may use the flat percentage method on supplemental wages, which withholds federal income tax at 22% up to $1,000,000 of supplemental pay in a calendar year and 37% above that (IRS Pub. 15). That is a payroll convention, not a tax rate. At filing, the bonus is pooled with the rest of your income and taxed at your real progressive rate. If your marginal rate is below 22%, the flat withholding over-collects and comes back as a refund. If you are in the 24% bracket or higher, it under-collects and you owe the difference. This tool shows both the paycheck number and the after-filing number, plus the true-up between them. The Bonus Tax Take-Home Calculator covers state supplemental rates in detail.
How do I calculate the break-even point between a bonus and a raise?
Compute the after-tax value of the bonus once, then the after-tax value of the raise year by year, and add the raise years up until the running total passes the bonus. The first year where the cumulative raise exceeds the bonus is the break-even year. Because the raise grows with future merit increases and earns an employer match every year, the crossover usually lands earlier than a simple "bonus divided by raise" estimate suggests.
Does a bonus count toward my 401(k) match?
It depends entirely on your plan document. Some plans define eligible compensation to include bonus pay and match it exactly like salary. Others exclude bonuses, sign-on payments, and retention awards from the match formula. Check your summary plan description. This calculator has a checkbox for it, because a plan that excludes bonus pay quietly moves the break-even year earlier: a raise is matched every single year. The 401(k) Paycheck Impact Calculator shows what your own contribution does to each check.
Does a raise really compound?
Yes, in two ways. Your next percentage merit increase is calculated on the higher base, so a 3% raise next year is worth more dollars than it would have been. And an employer match set as a percentage of pay grows with the base too. Set "expected annual merit raise" to 0% in this tool to see the comparison without compounding, then raise it to 3% to see how much the compounding is worth over your horizon.
Will part of my raise be taxed at a higher rate if it crosses a bracket?
Only the portion above the threshold. The US federal system is progressive, so moving into a higher bracket raises the rate on the dollars inside that bracket and never on income you already earned. Your take-home always goes up. This calculator runs the full 2026 bracket ladder on the salary with and without the raise and differences the two, so a raise that straddles a bracket edge is split correctly. For a single-raise breakdown, see the Raise Net Take-Home Impact Calculator.
What happens if the bonus or raise pushes me past the Social Security wage cap?
Social Security tax is 6.2% only on wages up to the 2026 wage base of $184,500. Dollars above that pay no Social Security tax at all, so your keep rate on that segment goes up by 6.2 percentage points. If your salary already clears the cap, neither the bonus nor the raise pays Social Security. Medicare's 1.45% has no cap, and wages above $200,000 (single) or $250,000 (married filing jointly) pay an extra 0.9%.
What if I invest the bonus instead of spending it?
This calculator compares nominal, undiscounted dollars. It does not assume you invest the bonus or discount the raise for inflation. Investing the lump sum pushes the break-even year later, because the bonus is earning a return while it waits. But the raise dollars can be invested too, and they arrive every year rather than once, so the raise still overtakes the bonus, just further out. If you want to weigh that, run the tool at a longer horizon and treat the difference as your margin of safety. The Raise Needed to Beat Inflation calculator handles the purchasing-power side.