Hello everyone,

I am about to get my sign in bonus, and checked on the HHRR website that the employer is going to withheld only 25%

I live and work in NYC, and according to my tax bracket, my overall yearly total tax expenses are on the 39% basis. I know that bonuses get taxed heavier than regular income and my federal income tax bracket is around 21% (avg)

Can someone help me understand why may the employer only withhold 25% and which is the total real tax rate I should be paying?

Thanks,

Bonuses are taxed as ordinary income - they are not taxed heavier than regular income. It is usual for employers to withhold 25% for federal taxes on one-time payments like bonuses - whether this is the correct amount or not can't be determined until you file your tax return at the end of the year. Your employer should also withhold for social security, medicare, and NY state and city income tax. If you add those up you will see that your total tax withholding will be in the 40% range. When you say that your overall total tax expense is 39%, are you including these other taxes in that calculation?

Tax withheld is advance payment of tax. It is not actual tax as per your tax return.
For the year 2008, you will complete your tax return and figure out your tax. Then you will figure out the taxes you have already paid -- this includes withholding taxes.
If taxes paid by you are less than your actual tax, you will pay the balance amount. If taxes paid are more than your actual tax, you will get a refund.