Why Does This Keep Happening?
Many BigLaw attorneys find themselves blindsided by an unexpected tax bill every April, even after adjusting their withholding elections. The reason? Bonus tax withholding is often lower than what you actually owe.
When you receive a bonus, federal income tax is typically withheld at a flat 22% rate—unless your bonus exceeds $1 million, in which case the portion above that threshold is withheld at 37%.
However, as a high-income attorney, your marginal tax rate is likely much higher—often 32%, 35%, or even 37%. That gap between what’s withheld (22%) and what you actually owe (your marginal rate) is what leads to the dreaded tax bill.
And if you live in a state with income tax? Things get even trickier.
How to Calculate What You’ll Owe
To get ahead of the problem, you need to compare your actual tax liability to what’s being withheld. Here’s how:
Know What Your Firm Plans to Withhold
Check your bonus statement—your firm may list the withholding percentage or a dollar amount.
If it’s a dollar amount, convert it into a percentage of the total bonus.
If withholding info isn’t provided, ask HR or payroll.
Estimate Your Tax Bracket
To determine how much you’ll owe, start with your taxable income from salary alone:
Take your gross salary.
Subtract pre-tax deductions (401(k) contributions, HSA, pre-tax benefits).
Subtract the standard deduction (or itemized deductions, if applicable).
For example, a 4th-year associate earning $310,000, who maxes out pre-tax 401(k) and HSA contributions, may have an estimated taxable income of $260,000. Checking the 2025 tax brackets, this places them in the 35% marginal tax bracket.
Add Your Bonus to See Where You Land
Now, take your taxable income and add your bonus to see your total tax exposure.
For example, a $75,000 bonus raises taxable income from $260,000 → $335,000.
This remains in the 35% bracket, meaning the bonus is taxed at 35%.
Calculate What You’ll Owe vs. What Was Withheld
Your firm likely withheld 22% of your bonus ($16,500 on a $75,000 bonus).
But at a 35% marginal rate, your real tax owed is $26,250.
That’s a $9,750 shortfall!
Sound familiar? That’s your surprise tax bill.
Should You Adjust Your Withholding?
You have two options:
Increase Bonus Withholding – You can request higher withholding from your firm to cover your expected tax bill.
Plan for the Shortfall – Instead of withholding extra, set aside funds and invest or earn interest on them until taxes are due.
Which is better? It depends on your cash flow strategy—but consult a tax professional before making changes.
The Bottom Line
BigLaw attorneys often get hit with surprise tax bills because default bonus withholding is too low. To avoid this:
Know your firm’s withholding rate
Estimate your true tax liability
Decide whether to adjust withholding or set money aside
Tax planning is a crucial part of financial success—so take control now to avoid an unwanted surprise next April.