Sign-On Bonus

A sign-on bonus is a one-time payment for accepting a job offer. For tax purposes it is [supplemental wages](/glossary/supplemental-wages), withheld like any other bonus, with Social Security and Medicare on top.

Most employers withhold federal income tax on it at the 22% flat rate, so a $10,000 sign-on bonus arrives as $7,035 after federal income tax and FICA, and less once state tax comes out. Some employers gross it up so you receive the full promised amount.

Many offers require you to pay the bonus back if you leave within a set time. If you repay it in a later year, the employer does not refund the tax withheld; you claim it on your return instead. Estimate yours with the bonus tax calculator or see what it would take to net a set amount with the gross-up calculator.