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Comment by shadowmatter | Hacker News Reader

You can give a peer bonus of $200 to any individual with their manager's approval (which is very easy to get). They encourage giving peer bonuses for when someone goes the extra mile on something, but very few engineers initiate giving a peer bonus. After tax, it's about $100, hence the "I can poop $100" bit.

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Is "close to 50%" the going marginal tax rate in general? I calculate ~30% federal + ~10% California + possibly ~6% social security & Medicare to get that number; did I miss anything? (current grad student with a marginal rate a lot closer to 20%, haven't had the joy of full-on taxes yet)

Closer to 8% for SS & Medicare. Also, you'll typically have deductions taken out of bonuses for your 401(k) and ESPP contributions (maybe another 20-25%). Technically, those are still your money; and ESPP will come back to you before too long, but the psychological impact of opening up your paycheck and only seeing 30-40% of the gross you were told was your bonus is pretty frustrating.

Most of those people would hopefully be above the social security threshold of around $100K/year so that would not apply. I think a marginal tax rate of more like 30-40% is more accurate.

It depends on when in the year the bonus is delivered. If it's early in the year, it doesn't matter if you're going to hit the Social Security ceiling eventually, they take it out of your bonus. I speak from personal experience both on this matter, and on my previous accounting of only 30-40% of bonuses actually hitting my bank account.

there is increased withholding on bonus pay, some of which you get back with your tax return.

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