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Offer, installments and clawback

Retention Bonus Calculator

Estimate retention bonus value, rough take home amount, service completion, installment timing and clawback exposure.

Retention agreement templateEmployee bonus policy

Last reviewed 20 August 2026

What is a retention bonus?

A retention bonus is a cash payment offered for staying with an employer through a defined date or event. It is not a performance bonus: it is paid for presence, not results. Typical size is 10–25% of base salary, and it is almost always attached to a stay period, a payment schedule and a clawback clause that recovers the money if you leave early.

They appear in three situations: a merger or acquisition where key staff must not leave during integration, a system or site closure that needs specific people to the end, and a counter-offer to someone who has resigned. The reason behind the offer tells you a great deal about your leverage.

Go to the calculator ↓or keep reading for the formula
Gross earned retention value
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Rough net after withholding
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Educational estimate only. This is not payroll, tax, legal or HR advice.

Offer evaluation checklist

✓
Payment timing
Upfront, anniversary, completion, or installments.
✓
Service condition
The date or period that must be completed.
✓
Clawback language
What must be repaid if the employee leaves early.

Related tools and next steps

Retention bonus agreement template
Clauses and clawback wording.
Employee bonus policy template
Eligibility and approval structure.
Bonus software guide
When HR needs governed workflows.

Worked example: a stay-bonus over 24 months

A $20,000 retention bonus tied to staying 24 months is worth about $833 per month of service. If paid in two equal installments, that is $10,000 at 12 months and $10,000 at 24 months.

Per-month value = Retention bonus ÷ Retention period (months)
Result
$20,000 over 24 months (~$833/month)

Retention bonuses often carry a clawback if you leave early — check the agreement.

Total retention bonus
$20,000
Installment 1 (12 mo)
$10,000
Installment 2 (24 mo)
$10,000
A retention bonus split into milestone installments across the stay period.
Total bonus
$20,000
Period
24 months
Per month
~$833
Installments
2 × $10,000
Clawback
Common
Taxable
Yes (as income)

The four clauses that decide what it is worth

1
The stay date. Usually 6, 12 or 24 months, or “completion of the integration”. Vague trigger events favour the employer — push for a fixed date.
2
The payment schedule. Lump sum on the stay date, instalments, or partly upfront. Money paid upfront is worth materially more than money promised in two years, and it is money you already have if the company’s plans change.
3
The clawback. Leave early and you repay — often the gross amount, even though you only received the net. Repaying gross on money you were taxed on is a genuinely nasty outcome; ask for the clause to say net, or for pro-rata rather than full repayment.
4
The termination carve-out. Does the clawback apply if they make you redundant? A well-drafted clause exempts redundancy, dismissal without cause and constructive dismissal. If it does not, the bonus is a handcuff with no lock on their side.

How a retention bonus is taxed

It is ordinary employment income, taxable in the year it is received — not the year it was earned or promised.

United StatesSupplemental wages: commonly withheld at a flat 22% federal rate up to $1 million and 37% above it, plus state tax, Social Security and Medicare. A $20,000 retention bonus typically nets around $13,000–$14,000.
United KingdomTaxed through PAYE with National Insurance. A higher-rate taxpayer keeps roughly 58% after 40% tax and 2% NI; the month it lands may over-deduct and correct later.
The clawback trapIf you repay in a later tax year, recovering the tax you already paid is often awkward and sometimes incomplete. This is the strongest practical argument for negotiating a net-of-tax clawback.
Worked example
$20,000 gross → ~$13,400 net

22% federal supplemental ($4,400) + 7.65% FICA ($1,530) + roughly 3.5% state ($700) leaves about $13,370. Educational estimate only — your own position will differ.

Is it actually worth staying?

The honest comparison is not “bonus versus no bonus”. It is the after-tax bonus against what you give up by not moving.

FactorQuestion to answer
Net valueWhat actually reaches your account, after tax and after any instalment delay?
Salary forgoneA 15% raise on $90,000 is $13,500 a year, every year. A one-off $18,000 retention bonus is worth less than that within 18 months.
Market timingWill the roles you want still be open in 12 months, or is this a strong hiring window?
What the offer signalsRetention bonuses cluster around restructuring. Being paid to stay through an integration often means the role changes materially afterwards.
Clawback exposureIf you have to leave for personal reasons in month 10, what do you owe?
The rule of thumb: a retention bonus is worth taking when it exceeds the after-tax value of the pay rise you would get by moving, over the same stay period — and when the clawback carves out redundancy. If either fails, it is usually a delaying tactic rather than a reward.

Compare against a permanent raise using the bonus pay calculator, or read the retention agreement template for the clauses to look for.

Retention bonus questions

What is a retention bonus calculator for?

It estimates the value of a stay bonus or retention offer, including service completion, installments and clawback exposure.

Does this calculate take home pay?

It includes an optional estimated withholding field, but it is not payroll or tax advice.

What is clawback exposure?

Clawback exposure is the portion that may need to be repaid if the employee leaves before the service condition is met.

What is a clawback on a retention bonus?

A clawback requires you to repay some or all of the bonus if you leave before the agreed date. Many agreements prorate the repayment by time served.

Are retention bonuses paid upfront or over time?

Both exist. Some pay upfront with a clawback; others pay in installments at milestones, which lowers the employer's risk.

How is a retention bonus calculated?

Most are set as a percentage of base salary, commonly 10-25%, or as a flat negotiated amount. Multiply salary by the percentage for the gross figure, then apply supplemental tax withholding to estimate what you actually receive.

How is a retention bonus taxed?

As ordinary employment income in the year received. In the US it is treated as supplemental wages, usually withheld at a flat 22% federal rate plus state tax and FICA, so a $20,000 bonus nets roughly $13,000 to $14,000.

Do I have to pay back a retention bonus if I leave?

If the agreement contains a clawback, yes - and many require repayment of the gross amount even though you only received the net. Check whether repayment is full or pro-rata and whether redundancy is carved out.

Reviewed 20 August 2026 by the BonusPayCalc editorial team. Gross planning estimates only — not payroll, tax, legal or HR advice. See methodology for how formulas are chosen, or report a correction.