A bonus feels like free money until tax hits it. See exactly what your bonus costs you and what you take home.
A bonus feels like free money until the tax bill lands on it too. This Bonus Tax Calculator tells you, in rupees, how much tax your bonus adds to your annual liability and what you'll actually pocket after your employer deducts TDS.
It's built for salaried employees, HR and payroll teams running appraisal cycles, and anyone comparing a job offer's variable pay component before signing. If you've ever opened a payslip and wondered why your bonus month felt lighter than expected, this is the tool that explains why.
Bonus isn't taxed on its own. It gets added to your salary and pushed through the same slab structure as your regular pay. Under Section 15 of the Income-tax Act, 2025 (the provision that replaced Section 17(1) of the 1961 Act from April 1, 2026), any bonus, commission, or performance payout from an employer is treated as "Salary" income, full stop. There's no separate bonus tax rate anywhere in Indian law.
The formula the calculator runs:
Tax on Bonus = Total Tax (Salary + Bonus) − Total Tax (Salary only)
Both sides of that subtraction go through the same steps:
Gross Income = Annual Salary + Bonus (if applicable)
Taxable Income = Gross Income − Standard Deduction − Other Deductions (old regime only)
Tax = Slab Rate Tax − Section 87A Rebate (with marginal relief) + Surcharge (if any) + 4% Cess
Your employer deducts this incrementally through the year under Section 392 of the Income-tax Act, 2025 (formerly Section 192), which requires TDS on salary based on your projected annual income — bonus included. The exact slab rates, standard deduction, and rebate limits are published on the Income Tax Department's official tax slabs page for salaried individuals.
Priya works in Pune and earns ₹9,60,000 a year. Her company announces a Diwali bonus of ₹1,50,000. She's on the new tax regime.
Without bonus: Gross salary ₹9,60,000, minus ₹75,000 standard deduction, gives taxable income of ₹8,85,000. Slab tax on that comes to ₹58,500. Since ₹8,85,000 is under the ₹12 lakh rebate ceiling, Section 87A wipes it out completely. Tax payable: ₹0.
With bonus: Gross income becomes ₹11,10,000. After the standard deduction, taxable income is ₹10,35,000 — still under ₹12 lakh. Rebate applies again. Tax payable: ₹0.
Priya's bonus, in this case, costs her nothing extra. But change the numbers slightly and it's a different story. Suresh, a manager in Bengaluru, earns ₹11,40,000 and gets a ₹1,00,000 bonus. Without the bonus, his taxable income after the standard deduction is ₹10,65,000 — rebate applies, tax is zero. With the bonus, taxable income jumps to ₹11,65,000, which is still under ₹12 lakh, so he's still fine. But push his bonus to ₹1,50,000 instead, and taxable income lands at ₹12,15,000 — just past the cliff. Slab tax on that comes to ₹62,250, and with 4% cess added it's ₹64,740. Marginal relief kicks in here: instead of paying that full ₹64,740, his tax gets capped at ₹15,000, the exact amount by which he crossed the ₹12 lakh line. That's the calculator doing its job — catching the cliff before it surprises you.
Budget 2026 left the income tax slabs untouched from what Budget 2025 introduced, so FY 2026-27 runs on the same structure as FY 2025-26. The new regime's basic exemption sits at ₹4 lakh, with seven slabs climbing from 5% to 30%, a ₹75,000 standard deduction, and a Section 87A rebate of up to ₹60,000 that zeroes out tax for taxable income up to ₹12 lakh.
The bigger structural shift is the Income-tax Act, 2025, effective from April 1, 2026, which renumbered the entire law. Salary is now defined under Section 15 instead of Section 17(1), and TDS on salary sits under Section 392 instead of Section 192. The rates and rebate mechanics haven't changed — only the section numbers you'll see in official notices going forward. [VERIFY: Some payroll and tax advisory sites refer to a renamed "Form 130" replacing Form 16 under the new Act — the Income Tax Department's own portal still labels it Form 16 under Section 203 as of its last update, so treat the Form 130 name as unconfirmed until the department's forms page is updated.] The Act also redefines what counts as your tax year under Section 3, which matters if your bonus lands right around a financial year-end.
No. Your bonus is added to your total salary income for the year and taxed at your applicable slab rate under Section 15 of the Income-tax Act, 2025. There's no standalone bonus tax slab in Indian law, whatever HR chat groups might tell you.
Yes, often. Since your employer recalculates your projected annual tax liability the moment a bonus is added, the TDS deducted that month can spike. It evens out over the rest of the financial year, or gets refunded when you file your return.
Under the old regime, yes — investments under Section 80C, health insurance under 80D, and home loan interest under Section 24(b) all reduce your taxable income, bonus included. Under the new regime, these deductions mostly don't apply, so your options are limited.
You lose the full Section 87A rebate, but marginal relief caps your tax so it never exceeds the amount by which you crossed the threshold. You won't owe more tax than the extra income you earned. If you're sitting close to that line, our tax cliff calculator shows exactly how much headroom you have left before it bites.
Yes, both are treated as salary income and taxed identically. If you have to return a joining bonus later because you left before your bond period ended, you can claim relief in the year you repay it using our salary arrears tax relief calculator — that's a separate calculation, not covered here.
Yes. If your total taxable income, including the bonus, crosses ₹50 lakh, ₹1 crore, or ₹2 crore, the tool applies the relevant surcharge with marginal relief built in, so the numbers stay accurate at the top end too.
Your employer's TDS estimate depends on your regime declaration, other income you may not have disclosed, and how many months remain in the financial year. Small differences are normal and get reconciled at return filing.
Calculations verified by our team including CA Anita Patil. View our full accuracy policy and meet the team →
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