Grossing Up

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What is Grossing Up?

Grossing up is a term that describes an employer giving a cash bonus to an employee and also covering the taxed portion of the gift. This means that the amount received by the employee is equal to the exact award even after taxes are withheld.

Grossing Up Examples

Here is an example of how grossing up might work:

  • Federal income tax 22.00%
  • Medicare tax 1.45%
  • Social Security tax 6.20%
  • State income tax 6.00%

Under a grossing up policy, a $2,000 net cash award would actually cost the company $2,709. A startup that was ‘grossing up’ would cover the extra $709 for the employee.

This web page is also about grossing up.

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ContractsCounsel is not a law firm, and this post should not be considered and does not contain legal advice. To ensure the information and advice in this post are correct, sufficient, and appropriate for your situation, please consult a licensed attorney. Also, using or accessing ContractsCounsel's site does not create an attorney-client relationship between you and ContractsCounsel.


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