Treated as income, your raise or bonus will be reflected in your W-2. You don’t have to do anything different—just enter your W-2 as you would normally.
Use our refund calculator to see how your raise or bonus might affect your tax refund.
Here are some other things to know:
- When you get a bonus, your employer will report the amount on your W-2 in box 1 (combined with your normal wages or salary). And if your bonus wasn’t cash, your employer will still report the fair market value of it on the W-2
- Bonuses are treated as supplemental income and are subject to a 22% flat rate federal tax. Your bonus may also be subject to state taxes, although the rate depends on your state
- Getting a raise is a great time to review your W-4. You can change how much is withheld from your paycheck to offset your higher income. Ultimately, the amount of tax that’s withheld throughout the year affects how much you’ll be refunded (or owe) at tax time. So if you’re in a higher income tax bracket now, because of your raise, withholding more throughout the year can mean you’ll owe less, or be refunded more, come tax time
