Gross-Up Calculator

What a gross-up is, and when employers run one

Normal payroll runs forward. You know the gross, you withhold what the law says, and whatever survives is the net. A gross-up runs the same machine backwards. You start from the net, the number you already promised out loud, and work out the gross that delivers it after withholding. The employer absorbs the tax instead of the employee.

It comes up any time a payment was quoted as a take-home figure:

• Signing and retention bonuses. A candidate told "a $5,000 signing bonus" expects $5,000 in the account, not $3,517.50 after the flat 22% and FICA.
• Relocation. Moving reimbursements have been taxable wages since 2018 for almost everyone, so a $10,000 relocation package that is not grossed up quietly becomes a $7,035 one.
• Severance and settlements. Separation agreements name a number, and that number is usually the one the departing employee expects to bank.
• Taxable fringe benefits, awards, and prizes. A $1,000 vacation voucher or a spot award is wages, and nobody wants to withhold tax out of a gift card.
• Payroll corrections. When the employer got it wrong, making the employee absorb the withholding on the fix tends to go badly.

Gross-ups are discretionary. No rule requires one. The employer is choosing to spend the money so the promise lands the way the employee heard it.

The gross-up formula, and why you divide instead of adding

There is one formula, and it is a division:

Gross = Net / (1 - total tax rate)

Work the default. You promised $1,000 net. Federal supplemental withholding is 22%, Social Security is 6.2%, Medicare is 1.45%, and there is no state tax, so the total rate is 29.65% and the denominator is 0.7035. That gives 1,000 / 0.7035 = $1,421.46 of gross. Check it line by line: federal 22% of $1,421.46 is $312.72, Social Security is $88.13, Medicare is $20.61. Taxes total $421.46, and $1,421.46 minus $421.46 is exactly $1,000.00. That is the verified net line in the calculator above. It is there so you do not have to take the result on faith.

Now the mistake. The instinct is to add the tax back: 30% of $1,000 is $300, so pay $1,300. But $1,300 is taxable too. Withhold 30% of $1,300 and the employee banks $910, still $90 short of the promise. Add the $90 back and the extra $90 gets taxed as well, leaving another $27 short, then $8, then $2.40. The gap shrinks and never closes, because the money you add to cover the tax is wages, and wages are taxed. Dividing by (1 - rate) skips the chase and lands directly on the number it was heading for.

The 2026 rates that go into the denominator

The denominator is only as good as the rates in it. For a supplemental payment in 2026:

• Federal supplemental, 22%. The flat withholding rate on supplemental wages up to $1 million for the year (IRS Publication 15, Section 7).
• Federal supplemental, 37%. Mandatory on cumulative supplemental wages above $1 million. The employer does not get to choose.
• Social Security, 6.2%, up to a wage base of $184,500 for 2026, up from $176,100 in 2025. That caps the employee's Social Security tax at $11,439 for the year.
• Medicare, 1.45%, with no cap at all.
• Additional Medicare, 0.9%, on wages over $200,000 with one employer. Employee-side only: the employer does not match it (IRS Topic No. 751).
• State and local. Many states publish their own supplemental flat rate, several run more than one, and a handful (Texas, Florida, Nevada and others) have no income tax at all. These change every year, so look yours up rather than trusting a number baked into a web page.

Those caps are the reason this calculator asks for year-to-date wages, and the reason it does not just divide by a flat 29.65%. Take an employee sitting at $180,000 of Social Security wages who was promised a $7,500 net. The wage base leaves $4,500 of room, so the 6.2% stops once the payment covers that $4,500 and the Social Security line comes to exactly $279.00. A flat 29.65% denominator says the gross is $10,660.98. Solving the crossing says $10,161.99. The flat answer overpays by roughly $499 of employer money on a single payment, and the error grows with the size of the check. Most gross-up calculators hand you the first number. This one solves the crossing, and does the same for the 0.9% Additional Medicare threshold above it, where the tax only touches the part of the grossed-up payment past $200,000. The same wage-base logic drives the FICA tax calculator.

What a grossed-up payment looks like on the paystub

A gross-up is not a special kind of pay. It is ordinary wages that happened to get computed backwards, and the stub has to show it that way. Every output above maps to a line you can type:

• The earning line. The required gross ($1,421.46 in the default example) is the amount on the earning line, categorized as a bonus or other supplemental pay. Not the $1,000. The $1,000 never appears anywhere except at the bottom.
• The tax deduction lines. Federal income tax, Social Security, Medicare, Additional Medicare where it applies, and state or local tax each get their own deduction line, at the amounts shown above. Do not lump them: a stub that shows one "taxes" line is a stub nobody can check.
• The employer contribution line. The employer FICA match ($108.74 by default) is not withheld from the employee, so it never touches the deduction column. It belongs in the employer contributions section, and it is the reason a $1,000 promise costs the company $1,530.20.
• The net. Gross minus the deduction lines, footing exactly to the number you promised. If it does not foot, the stub is wrong.

One honest limit. This is supplemental-rate withholding, not a projection of what the employee will actually owe. The flat 22% is a withholding convention, not a tax bill. At filing, the grossed-up amount sits in Box 1 of the W-2 alongside their other wages and gets taxed at their real marginal rate, which could be higher or lower. An employee whose marginal rate is 32% can still owe more in April on a payment that was grossed up to the penny.

Once the numbers are settled, they have to become a document. Payslip44 builds it: reusable employer, employee, and line-item templates, W-2 / 1099 / statutory / owner classifications, separate earning, deduction, and employer-contribution lines with their own year-to-date amounts, six layouts, and money math that holds to the cent. Everything runs on-device, and finished stubs export to PDF, PNG, CSV, or plain text. If you are working from the gross instead, the bonus tax withholding calculator runs the same rates forward, the gross to net pay calculator handles a regular paycheck, the paystub calculator assembles the whole stub, and the YTD earnings calculator gets you the year-to-date wage figures the advanced section above wants.

Got your grossed-up figure? Download Payslip44 and put it on a stub the employee can actually check.