Gross-Up Calculator
When an employer wants an employee to receive a specific after-tax net amount, such as a $10,000 signing bonus or a $5,000 relocation reimbursement, the employer must pay a larger gross amount so that after all mandatory withholding, the employee nets the intended figure. This process is called grossing up. For supplemental wage payments such as bonuses and one-time reimbursements, the IRS allows a flat federal withholding rate of 22% on amounts up to $1,000,000 in supplemental wages per year, rising to 37% for any excess. On top of federal withholding, the employer must also account for FICA taxes (6.2% Social Security up to the annual wage base and 1.45% Medicare), state income tax withholding at the applicable rate, and any other payroll deductions. The gross-up formula is straightforward: required gross equals the desired net divided by one minus the combined withholding rate, expressed as a decimal. For example, if the desired net is $10,000 and the combined rate is 34.65%, the required gross is $10,000 divided by 0.6535, or approximately $15,302. This calculator applies that formula, breaking out each withholding component so you can confirm the gross amount to pay and the total tax cost of delivering the targeted net payment to your employee.
To deliver a net payment of $10,000 after withholding at 30% combined rate, gross pay must be --, resulting in -- in taxes withheld.
How the gross-up is calculated
The gross-up calculation finds the gross pay needed so that after all taxes and deductions, the employee receives the target net amount. The formula uses the combined withholding rate: federal supplemental rate (22% or 37%), FICA rate (7.65% or less if wage base exceeded), state rate, and any other deductions.
Combined rate = (fed rate + FICA rate + state rate + other rate) / 100
Gross pay = target net / (1 - combined rate)
Federal withholding = gross pay x fed rate / 100
FICA withholding = gross pay x FICA rate / 100
State withholding = gross pay x state rate / 100
Other deductions = gross pay x other rate / 100
Actual net = gross pay - all withholding
Worked example
Target net $10,000, federal 22%, FICA 7.65%, state 5%:
- Combined rate = (22 + 7.65 + 5) / 100 = 34.65% = 0.3465
- Gross = $10,000 / (1 - 0.3465) = $10,000 / 0.6535 = $15,297.99
- Federal withholding = $15,297.99 x 0.22 = $3,365.56
- FICA withholding = $15,297.99 x 0.0765 = $1,170.80
- State withholding = $15,297.99 x 0.05 = $764.90
- Total withholding = $3,365.56 + $1,170.80 + $764.90 = $5,301.26
- Actual net = $15,297.99 - $5,301.26 = $9,996.73 (rounds to $10,000)
Supplemental wage withholding rules
Supplemental wages are payments in addition to regular wages, including bonuses, gross-ups, and one-time payments. The IRS allows a flat 22% federal withholding rate on supplemental wages up to $1 million. For supplemental wages over $1 million in a calendar year, the rate increases to 37% on the excess.
FICA taxes apply to supplemental wages as follows: Social Security tax (6.2%) applies only on wages up to the annual wage base ($176,100 in 2025). Medicare tax (1.45%) applies to all wages with no cap. If the employee has already earned more than the wage base earlier in the year, FICA on the supplemental payment is limited to Medicare tax only (1.45%).
State income tax on supplemental wages varies by state. Some states follow federal withholding rates; others use different rules. Check your state's tax agency for specific rules. The calculator allows you to enter your state rate; use your marginal rate or average effective rate. Employers should file a corrected tax return or adjustment if actual withholding differs from final tax liability.
Gross-up payment: frequently asked questions
What is a gross-up payment?
A gross-up payment is when an employer calculates and pays the gross amount needed so that after all required tax withholding, the employee receives a specific net (take-home) amount. Common uses include signing bonuses, relocation reimbursements, and other supplemental payments where the employer wants the employee to receive a guaranteed net amount rather than having taxes reduce their benefit.
Why would an employer gross up a payment?
Employers use gross-ups to ensure employees receive a targeted benefit after taxes. For example, if an employer offers a $10,000 relocation reimbursement and the employee faces 30% in combined federal, state, and FICA withholding, the employer might gross up the payment to $14,286 so the employee nets exactly $10,000. This is especially common for executive bonuses and relocation packages.
How is the gross-up amount calculated?
The basic formula is: gross = net / (1 - combined tax rate). For example, if net desired is $10,000 and combined withholding is 30%, then gross = $10,000 / (1 - 0.30) = $10,000 / 0.70 = $14,286. However, supplemental wage withholding uses a flat 22% federal rate (for amounts under $1 million). FICA and state rates apply on top, so the combined rate is typically 22% + 7.65% + state rate.
What is the supplemental wage flat withholding rate?
For supplemental wages (bonuses, gross-ups, and one-time payments), the IRS allows a flat federal withholding rate of 22% on the gross supplemental payment (for amounts up to $1 million). This is simpler than calculating withholding based on annual income brackets. If supplemental wages plus regular wages exceed $1 million, the rate increases to 37% on the excess. FICA taxes (7.65%) and state income tax still apply separately.
Does the gross-up cover FICA taxes?
The gross-up formula includes FICA only if FICA applies. For supplemental wages, FICA applies at 7.65% employee portion (6.2% Social Security up to the wage base of $176,100; 1.45% Medicare uncapped). If the employee has already exceeded the Social Security wage base for the year, only Medicare tax applies. The calculator allows you to adjust the FICA rate or set it to 0 if FICA does not apply.
What about state income tax in the gross-up?
State income tax varies by state and income level. The calculator allows you to enter your state withholding rate (0% if your state has no income tax, or your marginal rate if it does). Some states have progressive brackets; use your effective rate for simplicity. The gross-up formula multiplies the gross amount by your state rate and includes that in the total withholding deducted from the net.
Official sources
- Supplemental wage withholding: IRS Publication 15 (Circular E).
- Supplemental wage topic: IRS Topic 307.
- FICA wage base limits: IRS Rev Proc 2024-40.
Reviewed by the CalculatorHub team, edited by James Graham, 13 June 2026. See our methodology. General information, not tax advice.