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The tax implication of getting a bonus is pretty much exactly the same as getting a raise; your income taxes will go up based on your marginal income tax rate. Your taxes may go up more than you expect for various reasons: you move into a higher tax bracket, (that's pretty easy to understand), or your higher income or results in some of the numerous phase-outs, phase-ins, surtaxes and other "gotcha's" that litter the US Income Tax Code, (e.g., the so-called Pease limit on itemized deductions).
Bonuses are simply "compensation" and about the only thing that makes a bonus different than a regular paycheck is that the withholding is typically calculated at a flat "supplemental rate" of 25%. Most states tax bonuses in a similar fashion. Without knowing your personal details I can't say if the supplemental rate will completely cover your additional tax liability or result in a refund or a large amount owed.
Tom Young
The tax implication of getting a bonus is pretty much exactly the same as getting a raise; your income taxes will go up based on your marginal income tax rate. Your taxes may go up more than you expect for various reasons: you move into a higher tax bracket, (that's pretty easy to understand), or your higher income or results in some of the numerous phase-outs, phase-ins, surtaxes and other "gotcha's" that litter the US Income Tax Code, (e.g., the so-called Pease limit on itemized deductions).
Bonuses are simply "compensation" and about the only thing that makes a bonus different than a regular paycheck is that the withholding is typically calculated at a flat "supplemental rate" of 25%. Most states tax bonuses in a similar fashion. Without knowing your personal details I can't say if the supplemental rate will completely cover your additional tax liability or result in a refund or a large amount owed.
Tom Young
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