Gross-Up

A gross-up is an increase to a payment so that, after taxes are withheld, the employee receives a target amount. Employers gross up bonuses, relocation payments and awards when they promise a set take-home figure.

With a flat rate the math is the net amount divided by one minus the total tax rate. To net $1,000 when 22% federal and 7.65% FICA apply, the gross is $1,000 / (1 - 0.2965) = $1,421.46. State and local tax push it higher. The gross-up calculator handles every state.

Grossing up is the reverse of working out net pay. The extra tax the employer covers is itself taxable pay, which is why the gross-up is bigger than the tax on the original amount. It usually applies to supplemental wages such as a sign-on bonus. Employers can price the full cost with the bonus payroll calculator.