STIP vs Annual Bonus

STIP, STI and “annual bonus” are used loosely inside most companies, and the wording on your plan document decides which formula actually applies to you. This page shows the difference so you pick the right calculator.

Use STIP calculator Use annual bonus calculator

Best next steps

STIP bonus calculator — weighted scorecard payout
Annual bonus calculator — salary-based yearly plan
STI vs LTI — short vs long-term incentives

Method note: Results are estimates. Always compare with your plan document, payroll rules and employer policy.

Last reviewed 20 August 2026

Main difference

Plan type	Usually means	Best calculator
STIP / STI	Short-term incentive with scorecard weights, company funding and caps.	STIP bonus calculator
Annual bonus	Yearly bonus from salary, target percentage and performance factors.	Annual bonus calculator
Year-end / holiday bonus	Seasonal, discretionary or flat bonus.	Year-end bonus calculator

Why the distinction is worth money

A STIP payout runs through a scorecard — company multiplier, team score, individual score, eligibility and a cap. A plain annual bonus is often salary × a fixed percentage. On a $90,000 salary with a 15% target, a scorecard at 110% company and 95% team pays $14,107, while the flat calculation pays $13,500. Same salary, same target, $607 apart — and the gap widens fast at senior target percentages. Use the wording on your plan document to decide which formula applies.

STIP and annual bonus, side by side

	STIP / STI	Plain annual bonus
Formula	Target × company × team × individual, capped	Often just salary × percentage
Governed by	A formal plan document	Sometimes only a policy line
Threshold	Almost always — below it, nothing pays	Frequently none
Cap	Usually 150–200% of target	Often uncapped because it cannot exceed target anyway
Range of outcomes	0% to 200% of target	Usually 0% or 100%
Who has one	Professionals and above at larger employers	Common at smaller employers and in junior roles

Same salary, same target, different plan

$14,107 vs $13,500

$90,000 salary, 15% target. STIP with a 110% company factor and 95% team score pays $14,107. A flat annual bonus pays $13,500. A $607 gap in a normal year — and in a weak year the STIP could pay $8,000 while the flat bonus still pays $13,500. Educational gross estimates only.

How to tell which one you are on

Look for the words “short-term incentive”, “STI” or “STIP” in your offer letter or plan document. That is decisive.

Is there a company multiplier? A named company or funding factor means a scorecard plan.

Is there a cap expressed as a percentage of target? Caps only make sense where payouts can exceed target.

Does your payslip show a separate incentive line? STIP payments are usually itemised separately from salary.

Use the STIP calculator for scorecard plans, or the bonus pay calculator for a straight salary-times-percentage bonus. Full definitions: what is a STIP bonus.

STIP versus annual bonus questions

What is the difference between STIP and an annual bonus?

A STIP is a formal short-term incentive plan with a scorecard: target bonus multiplied by company, team and individual factors, with a threshold and a cap. A plain annual bonus is often just salary multiplied by a fixed percentage, with no multipliers.

Is STIP the same as STI?

Yes, in most companies. STI is the incentive itself and STIP is the plan document that governs it, but the two words are used interchangeably in practice.

Can a STIP pay more than target?

Yes. Scorecard plans routinely pay above 100% when company and individual results exceed plan, up to a cap that is usually 150-200% of target. A flat percentage bonus normally cannot exceed target.

Which is better for the employee?

A flat bonus is more predictable and cannot be reduced by a weak company year. A STIP has more upside but also real downside, including zero if the funding threshold is missed.

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.