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What is the tax rate on bonuses that exceed $1 million?

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The tax rate on bonuses that exceed $1 million can be quite hefty, with federal taxes alone taking a flat 22% and state taxes adding an additional percentage. In California, for example, employees pay an additional 10.23% on bonuses, which comes to a combined 32.23% to 47.23% tax rate for federal and state. This can be a significant blow to your bonus, leaving you with much less than you initially anticipated. However, there are strategies to minimize your tax bill and make a difference in the world at the same time. One such strategy is using charitable giving as part of your tax strategy. An estimated 73% of Americans reported donating to charity in 2020, and while this number may seem high, it's actually a new low. This is where Daffy comes in as a great option for a Donor-Advised Fund (DAF). With Daffy, you can lower your taxable income while helping charities you care about. Plus, you can invest the money in your chosen portfolio until you’re ready to make a donation. This not only allows you to give back to the community but also helps you manage your taxes more effectively. So, if you're expecting a big bonus and are concerned about the tax implications, consider Daffy. It's a win-win situation - you get to reduce your tax bill and make a positive impact in the world.

Please note that the information contained on this page is for educational purposes only and should not be considered tax advice. Any calculations are intended to be illustrative and do not reflect all of the potential complexities of individual tax returns. To assess your specific tax situation, please consult with a tax professional.

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