Festival Bonus Calculator
What a festival bonus lands as after tax, and its monthly worth.
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Formula
How the calculation works
A bonus announced as a percentage of salary is a gross figure, and a bonus is normally taxed as ordinary income. On the example, 50% of a 30,000 salary is 15,000 gross; at 10% tax, 1,500 goes and 13,500 lands.
Dividing that by twelve gives 1,125, which is the honest monthly worth of an annual lump. It is the figure to use when deciding whether the bonus really changes a monthly budget.
Common mistakes
- Spending against the gross figure. The tax comes out before the money lands, so a plan built on 15,000 is short by the tax.
- Forgetting the second bonus. Where a festival pays two bonuses in the year, each is taxed, and the pair is not the same as one double payment at a different rate.
When to use it
- Use it when a bonus is announced, to see what will actually land and what it is worth month by month.
- It applies one tax rate to the bonus. Where the bonus pushes income into a higher band, the real tax is larger; use the take-home tool for a full-year figure.
Worked example
A 30,000 salary with a 50% bonus at 10% tax: bonus 15,000, tax 1,500, net 13,500, or 1,125 a month.
Common questions
Why is a bonus taxed?
In most countries a bonus counts as ordinary income, so less lands than the headline figure.
What is the monthly figure for?
Spreading a one-off lump across the months shows what it is really worth to you.
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