Massachusetts Bonus Tax Calculator:
Employers' Trusted Tool for Accurate Bonus Payments
The bonus tax calculator from Beyond, located at the top of this page, assists employers in quickly estimating the take-home pay (or net pay) employees should receive for bonuses.
Does Massachusetts Tax Bonuses?
Yes. In Massachusetts, bonuses are considered supplemental wages and are subject to the same withholding as regular income. Employers must apply the state’s flat income tax rate of 5.0% when calculating withholding on separately paid bonuses. Commissions and other supplemental payments are treated in the same way.
How to Calculate Bonus Tax in Massachusetts
When a bonus is paid separately from regular wages, Massachusetts allows employers to withhold at a flat 5.0% rate, which aligns with the state’s standard income tax rate.
If the bonus is combined with regular wages in the same paycheck, employers must calculate withholding using the total combined amount and the standard Massachusetts withholding tables.
The Beyond HCM calculator above uses the percentage method to estimate withholdings for separately paid bonuses.
What Is the Bonus Tax Rate in Massachusetts?
Massachusetts applies a flat 5.0% income tax rate to all taxable wages, including bonuses and commissions.
Employers must also withhold federal supplemental taxes at 22% (or 37% for total bonuses above $1 million in a calendar year), plus FICA taxes (Social Security and Medicare).
This means the combined withholding on a separately paid bonus is generally around 27%, excluding Social Security and Medicare contributions.
How Can Employers in Massachusetts Pay Bonuses to Employees?
Bonuses can be issued through any standard payment method, including:
– Check
– Direct deposit
– Pay card
Employers must ensure all applicable taxes are withheld and that the payments are properly reported on Form W-2.
How Do Bonuses Work in Massachusetts?
Employers are required to treat bonuses as taxable wages for both state and federal purposes.
If paid separately, the flat 5.0% state rate can be used; if combined with other wages, standard withholding tables apply.
Bonuses are also subject to Social Security and Medicare (FICA) taxes like regular wages.
Why Are Bonuses Taxed Differently Than Standard Pay?
They are not taxed differently under Massachusetts law—bonuses are simply a type of supplemental wage subject to the same rate as ordinary income.
However, federal law allows a flat 22% supplemental rate for convenience, which simplifies payroll withholding for separately paid bonuses.
How Much Tax Is Taken Out of a Bonus in Massachusetts?
Here is a general breakdown of potential withholding on a separately paid bonus:
– Federal: 22%
– Massachusetts: 5.0%
– Total (excluding FICA): approximately 27%
With Social Security (6.2%) and Medicare (1.45%) included, the effective total withholding may reach around 34.65% depending on the employee’s total wages for the year.