How Massachusetts withholds on a bonus
Massachusetts withholds a bonus at its flat 5% rate, the same as every other dollar of wages, with no separate supplemental figure. The 4% surtax on income above $1,083,150 is not withheld through payroll and is settled on the return. On a $10,000 bonus the percentage method withholds $2,200 federal, $620 Social Security, $145 Medicare and $500 Massachusetts, leaving $6,535. Massachusetts Paid Family and Medical Leave's employee share, about 0.46% of wages up to the Social Security wage base, also comes out of a bonus and is not included; there are no local income taxes.
Because the state rate is flat, the aggregate method changes the Massachusetts line only marginally and raises the federal line to about $2,700 for a $60,000 earner paid every two weeks. The $4,400 exemption has been used up by salary, so a bonus is taxed at the full 5% on the return and the state withholding settles even.
What the withholding means for your Massachusetts return
Any refund on a Massachusetts bonus is federal: a $60,000 single filer's marginal federal rate is 12% up to $50,400 of taxable income and 22% above, so a $10,000 bonus is really taxed at about $1,450 federal against $2,200 withheld, and roughly $750 returns. New Hampshire residents who earn a bonus for work in Massachusetts are withheld for Massachusetts on it, since the state taxes non-residents on Massachusetts-source wages. The Massachusetts paycheck calculator shows the marginal rates for any salary. Exemptions on Massachusetts Form M-4 do not reduce the 5% withheld from a separately paid bonus; they apply only under the aggregate method.