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Bonus
Definition
A bonus is additional compensation beyond an employee's base salary, typically awarded for performance, company profitability, or special achievements.
Explanation
Bonuses come in many forms: performance bonuses, signing bonuses, referral bonuses, holiday bonuses, and profit-sharing. Performance bonuses are often tied to individual, team, or company goals. Some bonuses are guaranteed, while others are discretionary.
Bonuses are subject to income tax withholding, often at a higher percentage rate than regular wages. When evaluating job offers, consider whether bonuses are guaranteed or target-based.
Example
An employee with a $60,000 base salary and a 10% annual bonus earns an additional $6,000, bringing total compensation to $66,000.