Getting a bonus is exciting, but the first question many Arizona employees ask is: How much tax will be taken out? The answer depends on federal, state, and payroll taxes. At the federal level, most bonuses are subject to a flat 22% withholding rate (37% if the bonus exceeds $1 million). Arizona then applies its flat 2.5% state income tax, and standard payroll taxes for Social Security (6.2%) and Medicare (1.45%) also apply. In this guide, we’ll explain exactly how bonuses are taxed in Arizona, show you an example calculation, and compare Arizona’s approach to other states.
Quick Answer
In Arizona, bonuses are taxed just like regular wages. That means:
- Federal bonus withholding: 22% flat (37% if bonus exceeds $1 million).
- Arizona state tax: 2.5% flat rate, the same as your regular paycheck.
- Payroll taxes (FICA): 6.2% Social Security + 1.45% Medicare.
So if you get a $5,000 bonus, expect about $1,600 withheld in total taxes, leaving around $3,400 take-home.
Federal Taxes on Bonuses
At the federal level, the IRS classifies bonuses as supplemental wages. Employers can use two methods:
- Percentage Method: 22% flat rate for bonuses under $1 million, 37% for amounts above.
- Aggregate Method: Bonus is added to your regular paycheck and taxed according to your W-4 withholding and tax bracket.
Most employers in Arizona use the percentage method because it’s simpler and consistent.
Arizona State Withholding on Bonuses
Unlike some states with special supplemental rates, Arizona does not have a separate bonus tax rate. The state simply applies its flat 2.5% income tax rate to your bonus, the same as to your wages.
👉 For peace of mind, try the Arizona paycheck tax calculator or the Arizona bonus paycheck calculator to run your own numbers..
Payroll Taxes (FICA) Still Apply
Your bonus also gets hit with standard payroll taxes:
- Social Security tax: 6.2% (up to the annual wage cap).
- Medicare tax: 1.45% on all wages (plus 0.9% extra for very high earners).
These apply no matter what method your employer uses.
Example: $5,000 Bonus in Arizona
Here’s what withholding looks like using the percentage method:
- Federal tax (22%): $1,100
- Arizona state tax (2.5%): $125
- Social Security (6.2%): $310
- Medicare (1.45%): $72.50
Total withheld: ~$1,607.50
Take-home bonus: ~$3,392.50
Comparison: Arizona vs. Other States
Arizona is simpler than many states:
- California taxes bonuses at a 10.23% supplemental rate.
- New York has combined state + city supplemental withholding.
- Arizona applies only its 2.5% flat rate, making bonus taxation easier to predict.
FAQs About Arizona Bonus Taxes
Does Arizona have a special bonus tax rate?
No. Arizona uses the same flat 2.5% income tax rate on all wages, including bonuses.
What is the federal tax rate on bonuses?
22% for most bonuses; 37% for amounts over $1 million.
Do FICA taxes apply to bonuses?
Yes. Social Security (6.2%) and Medicare (1.45%) are withheld.
Can my employer withhold differently on a bonus?
Yes. Employers may use the aggregate method, combining your bonus with your paycheck. That may temporarily push your withholding higher.
How can I estimate my net bonus?
Use an Arizona bonus paycheck calculator to see your personalized take-home.
Harry is the creator of ArizonaPaycheckCalculator.com, a trusted resource for accurate and easy-to-use payroll and tax calculators. With a focus on clarity and precision, Harry helps Arizona residents understand their take-home pay, deductions, and withholdings. Dedicated to making complex calculations simple, he combines financial knowledge with user-friendly tools to save users time and confusion.