Bonus payments and taxes
We provide performance-based bonuses that are subject to mandatory tax withholding and are not guaranteed to continue or recur.
BONUS PAYMENTS & TAX WITHHOLDING
REBOOT Recovery may, at its discretion, award bonuses to employees in recognition of exceptional performance, organizational achievements, or other contributions. Bonuses are not guaranteed and are awarded based on organizational resources and leadership approval.
How Bonuses Are Paid
Bonuses may be issued either as part of a regular paycheck or in a separate payroll run. The timing and method of payment will be determined by the Operations and Finance teams.
Tax Withholding on Bonuses
Under federal and state law, bonus payments are considered supplemental wages and are subject to mandatory tax withholding. Federal taxes on supplemental wages are typically withheld at a higher flat rate (currently 22%), in addition to Social Security, Medicare, and any applicable state or local taxes. Because of this, employees should expect the net amount of a bonus payment to be lower than the gross bonus amount.
When Bonuses Are Included in a Regular Paycheck
If a bonus is paid as part of an employee’s regular paycheck, payroll systems are required to calculate taxes using the “aggregate method,” which temporarily treats the combined paycheck as if the employee earns that higher amount every pay period. This may cause withholding to appear higher for that pay cycle. This does not increase the employee’s actual tax rate for the year. It is only a withholding calculation. If too much tax is withheld because of the bonus, the employee will typically receive the excess back as part of their tax refund when filing their annual return.
Example
If an employee receives a $1,000 bonus, the net payment may be reduced to approximately $700–$750 after required tax withholding. This example is for illustration only; actual amounts may vary based on individual tax circumstances and the method of payment.
No Guarantee of Future Bonuses
Receipt of a bonus in one period does not guarantee future bonuses. All bonuses are discretionary and may change or be discontinued at REBOOT Recovery’s sole discretion.