If a bonus landed in your pay and a big chunk vanished to tax, you are not alone in thinking bonuses are taxed at some special penalty rate. They are not. A bonus is taxed at exactly the same marginal rates as the rest of your income. The reason so much comes out on payday is how your employer withholds tax on a one-off payment, not the actual tax you owe.
Here is what is really going on and how much of your bonus you keep.
The short answer
A bonus is ordinary income. It gets added to your salary for the year and taxed at your marginal tax rate, plus the Medicare levy — 2% for most people. There is no separate "bonus tax rate".
On most middle incomes that means you keep about 68 cents of every bonus dollar (taxed at 30% plus 2% Medicare in 2026-27). Higher earners keep less, lower earners keep more, because the marginal rate follows the normal tax brackets.
You can see the exact figure for your income with the Bonus Tax Calculator.
Why your bonus looks like it is taxed more
When your employer pays a bonus, how much PAYG tax they withhold on it depends on how the bonus relates to your pay periods, not on some special "bonus rate". If it relates to a single pay period, your employer adds it to that period's normal pay and withholds under the regular tax table, which treats that combined pay as if it recurred all year — so more can be withheld for that pay period than the bonus's own share of your final tax bill. If it relates to more than one pay period, or to an undefined period, your employer instead uses one of the ATO's Schedule 5 withholding methods instead of taxing it against a single period's rate. These usually spread the payment across the whole year's pay periods, but if the bonus relates to a defined period of under 12 months — for example a quarterly sales bonus — the employer can instead divide it across just that period's own pay periods.
That extra withholding is not lost. It is just tax paid in advance. When you lodge your return, your total income and total tax are reconciled, and any over-withholding comes back as part of your refund. So the scary number on your payslip is a cash-flow timing issue, not a higher tax rate.
How bonus tax actually works
Your bonus stacks on top of your salary and is taxed at whatever bracket that top slice of income falls into.
Take someone earning $90,000 who receives a $10,000 bonus in 2026-27:
- Their salary already sits in the $45,001 to $135,000 bracket, taxed at 30%.
- The $10,000 bonus also falls in that bracket, so it is taxed at 30% plus the 2% Medicare levy — 32% in total.
- Tax on the bonus: $3,200. Take-home from the bonus: $6,800.
If the bonus pushes part of your income into a higher bracket, only the portion above the threshold is taxed at the higher rate — the same progressive system that applies to your salary. Work out your own salary and marginal rate first with the Salary Tax Calculator.
How much of your bonus will you keep?
As a rough guide for 2026-27, here is what you keep from each bonus dollar at different income levels (resident, including the Medicare levy):
| Your salary | Marginal rate + Medicare | You keep per $1 |
|---|---|---|
| $30,000 | 15% + 10% (see below) | about 75c |
| $70,000 | 30% + 2% | about 68c |
| $140,000 | 37% + 2% | about 61c |
| $200,000+ | 45% + 2% | about 53c |
The $30,000 row surprises people, and it is the one worth knowing about. Between $28,011 and $35,013 you are inside the Medicare levy's low-income shade-in band, where the levy phases in at 10 cents in every extra dollar rather than the flat 2%. So a bonus on a low salary is taxed at 15% income tax plus 10% Medicare — 25% all up — until your total income clears $35,013. Above that band the levy settles back to a flat 2%.
These ignore any HELP/HECS repayment, which can take a little more (see below). For a precise figure on your salary and bonus, use the Bonus Tax Calculator.
These are the thresholds in the Medicare Levy Act as at 1 July 2026. The low-income thresholds are usually increased later in the year once indexation is confirmed, so check the current figures before relying on the low-income row above.
Bonuses, super and HECS
Two things often catch people out.
Super. Most performance bonuses count as qualifying earnings, so your employer usually pays the 12% super guarantee on the bonus on top, the same as your salary. A few narrow bonus types are not classed as qualifying earnings, so check your payslip.
HELP/HECS. A bonus lifts your income for the year, which lifts your compulsory student loan repayment. Because repayments are worked out on your whole year's income, a bonus can nudge you into a higher repayment rate. The HECS/HELP Calculator shows the effect.
What happens if you salary sacrifice your bonus into super?
If you arrange it with your employer before you become entitled to the bonus, you can salary sacrifice some or all of it into super instead of taking it as pay. A bonus sacrificed this way is not paid to you as salary — it goes into your fund as a concessional contribution, taxed there at 15% rather than at your marginal rate.
Some things to weigh up: it counts towards your $32,500 concessional contributions cap for 2026-27, and higher earners may also pay Division 293 tax on their concessional contributions. The money is also locked away until you reach preservation age and meet a condition of release, and whether it suits you depends on your own circumstances. The Salary Sacrifice Super Calculator compares the numbers against taking the cash.
Frequently Asked Questions
Only if your income reaches the top bracket — and a large enough bonus can push you there on its own, even if your salary alone would not. A bonus is taxed at your marginal rate plus the 2% Medicare levy. For most people that is 32% (30% plus Medicare), not 47%. The high tax some people see on their payslip is over-withholding, which is reconciled in your tax return.
Often, yes. If your employer withheld more than your actual marginal rate, the difference comes back as part of your refund when you lodge. If anything, large bonuses can also leave a small bill if withholding fell short, so it pays to check.
Usually yes. Most bonuses are qualifying earnings, so the 12% super guarantee applies on top. Some specific bonus types are excluded, so confirm on your payslip.
No. A Christmas or end-of-year cash bonus is taxed as ordinary income at your marginal rate, the same as any other bonus. (A non-cash gift may be treated differently under fringe benefits rules — ask your employer.)