ooooohhhhhhh, he burned you [insert foot in mouth here]
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In New York City, there is a 40% tax on all bonuses. I have no idea how it is in other states, I thought it was a nationwide thing.
They are in California at least. They are taxed at a higher percentage than regular income.More is WITHHELD from your paycheck because the bonus temporarily puts you in a higher income bracket. However witholding and the actual taxability of the income is two different things. When you file your taxes and calculate your tax liability, bonuses are treated EXACTLY the same as ordinary income. Therefore if too much was withheld initially, it will get refunded back to you (or if not enough was withheld you will end up owing tax because of the bonus). The federal and state governments do not have separate tax rates for bonuses.
My friends who are working at i-banks joke that they work eight days a week. In a way, it is true. I have a good friend working at a small i-bank in NYC and had to go home to Hartford for a funeral one Saturday...she had to borrow her bosses laptop to do work on the trainride. I-Banking is perhaps one of the only jobs that makes being a corporate lawyer look easy. In addition, base salaries are often low, especially for associates ($55-$65k, which is nothing in NYC). The real money comes from bonuses which, while often high, are taxed 40% to 50%.
It only gets worse once school starts!