Bonus Tax Calculator Australia 2025-26

Use this bonus tax calculator Australia guide to answer searches like "how much tax on my bonus", "why is my bonus taxed so high", and "bonus tax calculator Australia". It compares your real marginal-rate tax with employer PAYG withholding for 2025-26 so you can see what you actually owe versus what gets withheld on payday.

Based on 2025-26 tax rates including Medicare levy. Assumes Australian resident.

Need the full before-and-after picture? Check the Pay Calculator for take-home pay on your base salary, then compare with this bonus estimate.

Need the rule explanation before the numbers? Read why bonus withholding can be refunded at tax time or can you salary sacrifice a bonus? before running the calculator.

Related guides: ATO fortnightly tax table, tax on $100,000 salary, tax on $150,000 salary, and tax on $300,000 salary.

Bonus examples: tax on a $5,000 bonus, tax on a $10,000 bonus, and tax on a $20,000 bonus.

Common bonus searches: why is my bonus taxed so high, why is my bonus taxed at 47%, how much tax on my bonus, and can I salary sacrifice a bonus?

The "bonus tax" myth — debunked

One of the most common tax misconceptions in Australia is that bonuses are taxed at a higher rate. They're not. The ATO does not have a separate tax rate for bonuses. Your bonus is simply added to your annual income and taxed at your marginal rate — the same rate that applies to every other dollar you earn. To see how your bonus adds to your income tax, try the income tax calculator with your total salary plus bonus.

So why does it look like your bonus was heavily taxed? The answer is employer withholding.

If you're comparing a one-off payment with your normal payslip, use this page together with our Pay Calculator. The pay calculator shows your normal take-home pay, while this page isolates the extra tax impact of the bonus itself.

Why is my bonus taxed so high?

This is the question most people are really asking when they search for a bonus tax calculator. In most cases, your bonus is not taxed more heavily than salary. What changes is the withholding method your employer uses on the pay run. ATO PAYG schedules can treat that pay period like you earn the same inflated amount all year, so the withholding looks aggressive even when your final tax outcome is much lower. You can check the exact PAYG withholding rates the ATO publishes for each pay frequency.

That means two numbers matter:

• PAYG withholding on the payslip — the tax your employer deducts on the bonus pay run
• Actual tax on the bonus — the extra tax created by adding the bonus to your annual income

This calculator is designed to show the gap between those two numbers.

How marginal rates apply to your bonus

Australia uses a progressive tax system. Your income is taxed at increasing rates as it passes through each bracket. When your bonus is added to your salary, only the portion that falls into a higher bracket is taxed at the higher rate.

For example, if your salary is $90,000 and you receive a $10,000 bonus, your total income is $100,000. Both amounts fall within the $45,001-$135,000 bracket, so your bonus is taxed at 30% + 2% Medicare = 32%. There's no penalty or surcharge for it being a "bonus".

Why withholding looks so high

Employers calculate PAYG withholding using the ATO's pay-period method. Here's what happens when your bonus is paid:

1. They take the pay period — say your monthly pay is $7,500 and you also receive a $10,000 bonus that month, making the total $17,500.
2. They annualise it — $17,500 x 12 = $210,000 annualised income.
3. They calculate tax at that rate — $210,000 puts you in the 45% bracket.
4. They withhold accordingly — the withholding for that period is based on a $210,000 income, not your actual $100,000.

This makes it look like nearly half your bonus disappeared. But your actual annual income is only $100,000, so at tax time the ATO works out the correct tax and refunds the difference.

Worked example

Withholding vs actual tax — what's the difference?

Withholding is tax your employer deducts from each pay. It's an estimate based on the ATO's PAYG schedules. Actual tax is what you really owe, calculated on your total annual income when you lodge your return.

Because the withholding method annualises each pay period independently, any period with an unusually large payment (like a bonus) gets over-taxed. The ATO squares it up at the end of the year.

Why does my bonus look taxed at 47%, and do I get it back?

The short answer is that your bonus usually is not being permanently taxed at 47%. What you are seeing on the payslip is often PAYG withholding on that pay run, not your final year-end tax rate.

• Why it looks so high: the bonus pay run is annualised by the withholding formula, which can push the payslip estimate into the top bracket.
• What your real tax is: the bonus is added to your annual income and only the relevant top slice is taxed at the higher marginal rate.
• Do you get it back? if your employer withheld more than you actually owe across the year, the difference is reconciled when you lodge your tax return.

If you are deciding what to do next, use this calculator to estimate the likely refund gap, then compare with the Salary Sacrifice Calculator if you are considering directing part of the bonus into super before it is paid.

Ways to reduce tax on your bonus

• Salary sacrifice to super: Ask your employer to redirect part of the bonus into super before tax. It's taxed at 15% instead of your marginal rate (subject to the $30,000 concessional cap). Use our Salary Sacrifice Calculator to model the savings.
• Claim deductions: If you have work-related expenses you haven't claimed, increasing your deductions reduces your taxable income and may offset the bonus tax. See the WFH Deductions Calculator.
• Timing: If you have flexibility on when a bonus is paid, receiving it in a year when your other income is lower means a lower marginal rate applies.

Received a lump sum other than a bonus? The withholding rules differ depending on the payment type. Use the Redundancy/ETP Tax Calculator for tax on termination payments, or the Unused Leave Tax Calculator for tax on unused annual leave and long service leave payouts.

FAQ

Why does my bonus seem taxed at 47%?

Your bonus isn't actually taxed at 47%. Your employer withholds tax by annualising the pay period that includes the bonus, which inflates the apparent tax rate. When you lodge your tax return, the ATO calculates the real tax on your total annual income and you get a refund for any over-withholding.

Are bonuses taxed differently from regular income in Australia?

No. The ATO does not have a special bonus tax rate. Bonuses are added to your annual taxable income and taxed at your marginal rate, the same as any other income. The confusion arises because the employer's PAYG withholding method can make it look like a higher rate was applied.

Will I get the over-withheld tax back?

Yes. Any tax over-withheld by your employer throughout the year is reconciled when you lodge your tax return. If more was withheld than you owe, you'll receive a refund from the ATO.

Why does my payslip show so much tax on the bonus?

The payslip is showing withholding for that pay run, not your final annual tax outcome. Because the bonus inflates one pay period, the withholding formula can produce a much larger deduction than the amount you ultimately owe once the ATO reconciles your full-year income.

How does employer withholding work on bonuses?

Employers use the ATO's PAYG withholding schedule. They take the pay period in which the bonus is paid, annualise it (multiply by the number of pay periods per year), calculate tax at that annualised income, then divide back down to get the withholding for that period. Because the bonus inflates that single period, the annualised income is much higher than your actual annual income, leading to higher withholding.

Does the bonus push me into a higher tax bracket?

It can, but only the portion of income in the higher bracket is taxed at that rate. Australia uses a progressive tax system, so moving into a higher bracket doesn't mean all your income is taxed at the higher rate — only the amount above the bracket threshold.

Can I reduce tax on my bonus with salary sacrifice?

Yes. If you salary sacrifice part of your bonus into super before it's paid, that amount is taxed at only 15% (the concessional super contributions tax rate) instead of your marginal rate. This is subject to the $30,000 annual concessional contributions cap for 2025-26.

Last reviewed: February 2026 Uses 2025-26 ATO rates.