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You might be topic to Medicare and Social Security tax, unemployment tax(es), and depending on where you reside, you may additionally should pay local and state taxes. The IRS considers bonuses as a type of wages, and as such, they’re topic to federal taxes, similar to your normal pay. Employers often distribute bonuses near the holidays, on the finish of the company’s fiscal 12 months, or once an employee reaches sure goals. This information explains what bonuses are, how the bonus tax price works, and the steps you’ll have the ability to take to help understand and navigate the tax impression of this extra revenue.