Finance · Free tool
Bonus Tax Calculator
Bonus and variable pay are taxed at your marginal rate plus 4% cess. Roughly: at 30% slab, you keep ~69%. We compute exactly.
Your highest applicable slab. Add 4% cess automatically.
How it works
Bonus, variable pay, joining bonus and ESOP cash settlements are taxed as salary income in the month of receipt. Employers deduct TDS at your projected average rate for the year, so a lump-sum bonus often pushes you into a higher slab and the TDS rate jumps mid-year. The marginal rate is what you actually pay on the bonus rupee — 5%, 20% or 30% under the old regime, or the corresponding new-regime slab — plus 4% health-and-education cess and surcharge (10% above ₹50 lakh, up to 37%/25% capped).
Worked example
A Bangalore engineer at ₹24 LPA fixed gets a ₹3,00,000 annual variable bonus in April 2026. Under the new regime, base income places them in the 30% slab, so the entire bonus is taxed at 30% + 4% cess = 31.2% effective. Net in-hand on the bonus = ₹2,06,400; tax outgo = ₹93,600. If income crosses ₹50 lakh after the bonus, an additional 10% surcharge applies on the marginal portion.
When to use this
- Estimating in-hand for a March/April variable-pay payout
- Sizing a joining bonus you may have to refund if you quit within the lock-in
- Comparing a sign-on bonus vs a higher fixed CTC
Run the full annual picture with our income tax calculator or read CTC vs take-home explained.
FAQ
Why is bonus taxed at 30%+ when my salary is in 20% slab?
It probably isn't — your annual liability flows through your slabs in order. The bonus payout might *appear* taxed at 30% if HR uses worst-case TDS. The annual ITR reconciles to actual liability and refunds the excess.
Can I lower my bonus tax?
Yes — invest in 80C / 80D / NPS during the same FY to reduce taxable income. ELSS, PPF or extra NPS contribution under 80CCD(1B) are common levers. Buying health insurance for parents under 80D adds another ₹50k deduction.
What about the surcharge — when does it kick in?
10% surcharge above ₹50L taxable income, 15% above ₹1Cr, 25% above ₹2Cr (capped at 25% under new regime; 37% under old). Bonus often pushes high earners across these thresholds.