Most will offer typical bonus amounts as well as salary and benefits information. You don’t need to be a software engineer or a finance guru to get one of these incentives. Research shows that bonuses have increased most sharply for occupations that don’t require a college degree. Sometimes, a sign-on bonus will be paid out over time rather than as a lump sum up front.
It should include the terms of the bonus — like when you’ll receive it and any limitations — so read it carefully. You should know what to expect and ask any questions before you formally accept the offer, which will help alleviate new job anxiety and set you up for success. An individual who receives a $10,000 sign-on bonus and is in the 22% federal tax bracket will pay $2,200 of the bonus in taxes, leaving only $7,800. In most states, state income tax would further lower the value of the $10,000 bonus.
If an employee quits within a certain period of time after accepting the position, they may be required to pay back all or part of the sign-on bonus. The last thing you want is to pay out a signing bonus (especially if it’s $75,000!) and watch the employee quit after a month. Recent research from Robert Half shows that employers in many sectors struggle to hire talent — 90% of technology managers, for example, said it’s challenging to find skilled professionals. In such a competitive environment, a sign-on bonus could tip the scales in your favor.
- It’s offered to prospective new hires in addition to any other compensation they may receive.
- And if you said they’d receive the bonus via direct deposit, well, pay them via direct deposit.
- The sign-on bonus could be given all at once or split so that you receive half of the bonus upfront and the remaining half later on.
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- I am excited about the opportunity and the prospect of contributing to your team.
For example, you can discuss your expertise in a particular field or your track record of achieving results in past positions. For example, if you’re moving to a more expensive city with a higher cost of living, having that extra money can make the transition much smoother. Additionally, a sign-on bonus can help you feel more financially secure during those first few months of your new employment. However, it may be better to ask for higher base pay instead, as future raises will be based on this sign on bonus meaning amount.
How Sign-On Bonuses Work
Here are some key takeaways and examples to consider when navigating the world of sign-on bonuses. I appreciate your consideration of my request for a sign-on bonus, and I understand that there may be certain constraints or reasons that led to the decision not to include one in the initial offer. Your feedback is important to me, and I would like to better understand the rationale behind this decision, if possible. This insight will help me align my expectations and approach accordingly. I want to express my gratitude for the offer extended to me for the Senior Marketing Manager role at X Corporation. I am excited about the opportunity and the prospect of contributing to your team.
This type of retirement plan lets employers share the wealth with employees. Get up and running with free payroll setup, and enjoy free expert support. So, you must withhold sign-on bonus tax before giving it to the employee. For example, McDonald’s offered up to $500 as a sign-on bonus in 2022, and Walgreens offered up to $75,000 to pharmacists in some markets. 2) If offering a higher sign-on bonus is not immediately feasible, I am open to discussing flexible work arrangements that could benefit both the company and me. Similarly, if they leave during Year 2, they may be asked to repay the remainder of their Year 2 sign-on bonus (but they will keep their Year 1 sign-on bonus since they completed that year).
A software developer recently received an offer from a top tech firm with an impressive base salary, but no mention of a sign-on bonus. Knowing that competitors in the industry often provided sign-on bonuses, the candidate researched the company’s previous offers and found that sign-on bonuses were common in their field. The candidate then respectfully requested a sign-on bonus, explaining that it would help balance out the total compensation package and align it with industry norms.
To bridge the gap between your offer and candidate expectations
Some bonuses also come with a confidentiality agreement that prohibits you from discussing it with others. And if you quit the job within a certain period of time, you may have to return all or a prorated portion of the sign-on bonus to the company. Both your one-time payment and any added to your paycheck count as supplemental income, which means you do have to pay taxes on them. Your offer for a sign-on bonus can look great on the surface, but it could be masking other issues with the job that may not be favorable in the long run, like a lower base salary or high turnover.
While you might not be able to afford to pay her 5K more over the next couple years, you could find the funds to make the offer more appealing to her. Before you start negotiating a sign-on bonus, you need to do some background research. Look for information in your industry about typical sign-on bonuses, keeping in mind factors like your job location, your experience level, and your target company size.
How to Run an Effective Vetting Process for Candidates in 2022
It’s offered to prospective new hires in addition to any other compensation they may receive. After all, you’re not just looking for a number, but trying to find a good fit. Ideally, that’s a job where you want to stay three to five years, Herd said.
What To Watch Out for With Signing Bonuses
Sign-on bonuses also serve as an alternative to negotiating a higher salary, which can have long-term cost implications for an employer. By offering a one-time, upfront payment instead of increasing the annual salary, they can maintain their budget and avoid potentially inflated future payroll expenses. But these bonuses appear anywhere, depending on the company, the position, and the state of the market.
Before telling candidates about your sign-on bonus, you need to decide on the amount. Again, signing bonuses range from a few hundred to tens of thousands of dollars (and up). You’re struggling to find good, quality candidates to fill an open position. Or, you’ve found the perfect candidate and want to sweeten the job offer.
