Are MA Residents Taxed Higher On Christmas Bonuses This Year?
Did you ever notice that when you get a bonus check, its seems to be taxed at a higher rate? What's the deal with that? Is Uncle Sam taking too much for your extra earnings?
What's the deal with the tax rate and Christmas bonuses, or bonus money in general?
For the purpose of this post, we're talking about cash bonuses. You know, the ones you get a check for and count toward your total earnings the year.
My buddy Joe picked up an extra $975 bucks this year, not bad...
Federal Bonus Tax Rate Vs. Massachusetts Income Tax Rate
The federal tax rate on cash bonuses is a flat rate of 22% for any amount under $1M.
The rate goes to 37% for every dollar over a million.
Massachusetts taxes you the same on bonus money as it does on regular income.
California, for example, has a state tax rate of 10.23% on bonuses, double that of Massachusetts.
SO, why does your bonus check look so much lower than what you were told your bonus check was going to be!
When you see your bonus check, you might be surprised by how much lower the number is than the one your boss told you. That's because many companies withhold enough to prevent you from accidentally owing more than you expect come Tax Day. In the short term, you'll see less of your bonus, but luckily, this means you could be due for a refund equal to the extra amount they withheld. -fidelity.com
I hope this helps!