Bonus Calculator
Work out a percentage or a number of months of bonus and the yearly total it makes.
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Formula
How the calculation works
Schemes are written two ways: as a percentage of salary, or as a number of months' pay. The second is far more common and is why the tool multiplies by both rather than making you convert first.
The figure that matters is the yearly total, not the bonus alone. A two-month bonus on a modest salary can still leave a lower annual figure than a smaller bonus on a higher one, and only the yearly column settles that.
Common mistakes
- Comparing two offers on the bonus alone. The bonus is a slice of a salary, so a bigger slice of a smaller salary is often the smaller number.
- Assuming the bonus is tax-free. In most markets it is ordinary income, and the amount that lands is well below the headline figure.
When to use it
- Use it to compare two offers whose salaries differ but whose bonuses are written differently -- one in months, one in percent.
- It also answers the budgeting question at the other end of the year: knowing the yearly total is what makes a savings plan realistic.
Worked example
On 4,000 a month, a 10% bonus paid over 2 months is 800, making the yearly total 48,800.
Common questions
Is the bonus taxed?
In most countries a bonus is taxed as ordinary income, so what lands is less than the headline figure. Run the gross through the tax rate to get the net.
Does a raise raise the bonus?
If the bonus is a percentage or a number of months of salary, yes -- a raise lifts the bonus figure too.
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