How to gross up a bonus
A gross-up is the gross bonus an employer has to pay so that, after withholding, the employee receives a specific net amount — a $5,000 "take-home" spot bonus, a relocation payment meant to cover a cost exactly, or a holiday gift meant to land as a round number. Because the taxes are percentages of the gross, the gross is larger than the net by more than the tax rate itself.
The formula
When every withholding line is a flat percentage of the bonus, the gross is:
Gross = Net ÷ (1 − total withholding rate)
With the federal flat rate, the total rate is 22% + 6.2% Social Security + 1.45% Medicare = 29.65% before state tax. To net $5,000 in a state with no income tax: $5,000 ÷ 0.7035 = $7,107.32, and the calculator — which rounds each line to the cent as payroll does — returns $7,107.32. Add your state's flat supplemental rate to the 29.65% for a flat-rate state.
The common mistake is to multiply instead: $5,000 × 1.2965 = $6,482.50, which nets only $4,560.43 because the taxes are taken from the larger gross, not the net.
What $5,000 net costs in five places
Same employee ($3,000 biweekly, single, flat federal rate), solving for a $5,000 net check:
| Where | Gross bonus needed | Total withheld | Net |
|---|---|---|---|
| Texas | $7,107.32 | $2,107.32 | $5,000.00 |
| North Carolina | $7,546.02 | $2,546.02 | $5,000.00 |
| Illinois | $7,645.27 | $2,645.27 | $5,000.00 |
| California | $8,500.51 | $3,500.51 | $5,000.00 |
| New York City | $9,264.73 | $4,264.73 | $5,000.00 |
New York City is the most expensive here because New York State's 11.70% supplemental rate and the city's 4.25% stack on top of federal withholding, plus Paid Family Leave.
When the simple formula breaks
- Social Security cap. Once year-to-date wages pass $184,500 (2026), the 6.2% drops out. A gross-up for a high earner late in the year should use 23.45% + state, not 29.65% + state. Enter year-to-date wages in the calculator and it handles the cap.
- Additional Medicare. Above $200,000 of wages in the year, Medicare withholding rises from 1.45% to 2.35% on the excess.
- Graduated state rules. New Jersey runs the bonus through a bracket table, Connecticut and Hawaii aggregate it, and Massachusetts switches to 9% above its surtax threshold, so there is no single rate to divide by. The calculator solves these numerically instead of using the formula.
- The aggregate federal method. If payroll aggregates, the federal rate depends on the size of the gross itself. Solving iteratively (as the calculator does) is the only reliable way.
- The $1 million line. Above $1 million of supplemental wages, the federal rate is 37%, which changes the divisor for the excess.
Gross-ups are still taxable income
The grossed-up amount is the employee's wage for the year — it appears in Box 1 of the W-2 and is taxed on the return at the employee's bracket, exactly like any bonus. A gross-up guarantees the size of the check, not the final tax. The employer also pays its own share of Social Security and Medicare on the full gross, which is not shown in a net-pay calculation.