A common myth is that bonuses are taxed at a higher rate than regular salary. They aren't — a bonus is just additional taxable income for the year. The reason it feels heavily taxed is that bonuses usually push the entire amount into your top marginal tax bracket, where every extra dollar is taxed at 30%, 37% or 45% depending on your salary. Withholding at payment time can also be inflated.

The ATO sets out a specific withholding method (Method B(i) for back-payments and bonuses) that effectively annualises the bonus over the next 12 months and calculates withholding at the resulting marginal step. This usually approximates the actual tax owed, but isn't exact — especially if your taxable income for the year ends up different from the projection. Any over-withholding comes back as a refund when you lodge; any under-withholding becomes a tax bill.

This calculator shows you the actual tax payable on your bonus by comparing the income tax payable on (salary + bonus) versus salary alone. The difference is the true marginal tax cost of the bonus. For HELP/HECS interaction, the toggle flags that your repayment band is calculated on total repayment income, so a bonus can push you into a higher band. For the full pay-packet picture, see our Take-Home Pay Calculator.