# Bonus

*Everyday Money — Finicade finance glossary*

A bonus is variable pay on top of salary — annual, performance-based, signing, or retention. In tax terms it's usually 'supplemental income' and withheld at a flat rate (22% federally in the US on amounts up to $1m), which is why bonuses look overtaxed on arrival and often generate a refund later. Financially, the useful discipline is to treat a bonus as unbudgeted by default: it's the cleanest money in the year for clearing high-rate debt or filling a sinking fund, precisely because no lifestyle depends on it.

**Also known as:** annual bonus, performance bonus, 13th month pay

**Related terms:** [Gross Income](https://finicade.com/glossary/gross-income), [Withholding](https://finicade.com/glossary/withholding), [Commission](https://finicade.com/glossary/commission), [Windfall](https://finicade.com/glossary/windfall)

Source: https://finicade.com/glossary/bonus