Finance
Where’s the rest? Why your year-end bonus or gift may have shrunk
ICE launches recruiting campaign with $50K bonus
ICE is launching a campaign to recruit agents tasked with removing migrants with criminal records. The push offers strong pay and benefits.
Straight Arrow News
Americans who are receiving a year-end bonus for a job well done may be sorely disappointed when they open their envelope to find a big chunk missing.
Up to a third of a cash bonus can get swallowed up by the IRS’ special tax withholding on cash bonuses, or what it calls “supplemental income,” on top of Medicare, Social Security and state taxes. The federal flat rate for bonus pay is 22% for supplemental income under $1 million. Add Social Security (6.2%), Medicare (1.45%), and state taxes, and total withholding is roughly 30%-35%.
“That 22% federal withholding might be higher than your…regular tax bracket,” according to workforce management software company Homebase. “If they usually pay 12%, seeing 22% disappear from their bonus stings.”
Why can this spell financial disaster for Americans?
For the holidays, many Americans may have spent like they were receiving the full amount of the bonus instead of the bonus amount minus taxes, said Kevin Knull, chief executive of TaxStatus, which provides IRS data to financial advisers.
The $10,000 bonus for air traffic controllers who had perfect attendance during the government shutdown isn’t really a $10,000 bonus, for instance. The withholding on bonuses is a flat 22%, plus a 6.2% Social Security tax and 1.45% Medicare tax. Those reduce the bonus to just over $7,000, and you may still have to have state income tax taken out.
“That’s all immediately deducted and goes to Uncle Sam,” Knull said. “Somewhere around 48% of the population underestimate what they pay in taxes. Income taxes take a big bite out of paychecks.” If you spent the entire ‘$10,000 bonus,’ you overspent by about $3,000.
Separately, Americans should be aware that a bonus can also bump them into the next higher tax bracket if they’re already close to it, experts said.
Some (belated) good news?
If the tax cost of your bonus is less than 22%, or the withholding rate, you’ll receive a tax refund for the difference, or it will be applied to the tax due on any other income, experts said. Bonuses will be taxed as regular income on the final tax return. You’ll just have to wait until you file your 2025 taxes next year to get the money back.
On the flipside, if the tax cost of your bonus is more than the 22% withholding rate, you’ll owe the difference between what was withheld and your total tax cost.
How can you keep taxes low with your bonus?
If you haven’t maximized your 401(k) or IRA contributions for the year, consider adding some of the money to your retirement fund to reduce overall taxable income come tax season, wrote Kay Bell at financial products comparison site Bankrate. Contrbutions are income tax-free, but withdrawals later are taxed.
The 2025 IRA contribution limit is $7,000, or $8,000 if you’re age 50 or older. The 401(k) limit is $23,500 and an additional $7,500 for age 50 or older except those who are age 60 to 63. Those individuals have a higher catch-up contribution limit of $11,250 instead of $7,500.
Or if you expect your income to be much lower next year, pushing your tax bracket lower, consider asking your employer to defer the bonus until then, she said. You’ll still owe taxes, but you could save money by paying at a lower tax rate.
“However, even if your tax bracket doesn’t change year to year, some like receiving bonuses next year just to move the tax liability to 2026,” said Richard Pon, certified public accountant in San Francisco.
What about non-cash bonuses or gifts?
“Employers and employees may be shocked that gifts are usually taxable,” Pon said.
Cash and cash-equivalent gifts and bonuses such as gift cards, season tickets to sporting or theatrical events and gift certificates are taxed, Pon said.
“Sometimes employers deduct this from the regular paycheck,” he said. “Other times, employers pay these taxes on your behalf and gross up the income, which can double the cost of a $25 gift card to $50 with taxes if an employer pays the employee share of taxes…you should check your paystub to see if you are taxed.”
A couple of exceptions exist. The first is the “conduit gift,” which is a contribution made to an intermediary organization that then passes the funds to the final intended recipient. For example, if the parent teacher association (PTA) collected and gifted cash or gift cards to staff and faculty, those are conduit gifts and wouldn’t be taxed. The PTA was merely a conduit for gifts paid by parents.
Another exception is if a manager personally gives an employee a cash gift or gift card, Pon said. “That is a personal gift. It’s not a gift from your employer,” he said. Since the manager is “not the employer, those would be tax-free gifts to the recipients.”
He warned though those gifts may cause other frictions at work. “There are a lot of scrooges,” Pon said. “I once worked in an accounting firm and the managing partner complained I was giving gift cards and candy to our admin staff as a token of appreciation of helping me all year. The partner said I was making other managers seem unkind if they didn’t give out gifts.”
Noncash gifts like hams, turkeys, an occasional ticket to a sporting event or theatrical event are considered a “de minimis fringe benefit,” which is not taxable, Pon said. But note, a coupon or gift card intended to buy a turkey, ham or other item may be taxable, he said.
Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.
Written by Jitendra Parashar at The Motley Fool Canada
Dividend investing can be one of the simplest ways to build long-term wealth while creating a steady stream of passive income. But in my opinion, a good dividend stock is about much more than just a high yield. Beyond dividend yield, investors should also look for companies with durable businesses, reliable cash flows, and a history of rewarding shareholders consistently over time.
That’s exactly why many investors turn to financial stocks. Banks and asset managers often generate recurring earnings through lending, investing, and wealth management activities, allowing them to support stable dividend payments even during uncertain market conditions.
Two Canadian financial stocks that stand out right now are AGF Management (TSX:AGF.B) and Toronto-Dominion Bank (TSX:TD). Both companies offer attractive dividends backed by solid financial performance and long-term growth strategies. In this article, I’ll explain why these two financial stocks could be worth considering for income-focused investors right now.
AGF Management stock continues to reward shareholders
AGF Management is a Toronto-based asset manager with businesses across investments, private markets, and wealth management. Through these divisions, the company offers equity, fixed income, alternative, and multi-asset investment strategies to retail, institutional, and private wealth clients.
Following a 59% rally over the last 12 months, AGF stock currently trades at $16.67 per share with a market cap of roughly $1.1 billion. At current levels, the stock offers a quarterly dividend yield of 3.3%.
One reason behind AGF’s strong recent performance is its increasingly diversified business model. The company has expanded its investment capabilities and broadened its geographic reach, helping it perform well across varying market environments.
In the first quarter of its fiscal 2026 (ended in February), AGF posted free cash flow of $36 million, up 14% year over year (YoY), driven mainly by higher management, advisory, and administration fees. These fees climbed to $92.5 million as demand for the company’s investment offerings strengthened.
AGF has also been focusing on expanding its alternative investment business and introducing new investment products. With strong cash generation and growing demand for alternative investments, AGF Management looks well-positioned to continue rewarding investors over the long term.
TD Bank stock remains a dependable dividend giant
Toronto-Dominion Bank, or TD Bank, is one of North America’s largest banks, serving millions of customers through its Canadian banking, U.S. retail banking, wealth management and insurance, and wholesale banking operations.
Finance
Martha Aguirre, former El Paso ISD interim superintendent, resigns as CFO as district finds ‘key financial challenges’
El Paso Independent School District Chief Financial Officer Martha Aguirre, who served as interim superintendent last year, resigned this week as the district said it had discovered “key financial challenges.”
The district issued a news release late Thursday afternoon that lacked details but indicated that a recent review had raised questions about the district’s fund balances, a key indicator of financial health.
“Through this process, key financial challenges were identified that must be addressed prior to closing out the 2025-26 school year including a current budget shortfall that is being actively addressed ahead of the district’s final financial presentation to the Board of Trustees in June,” the news release said.
A CFO is charged with developing a school district’s budget and overseeing its finance department. The EPISD Board of Trustees must adopt a budget for the 2026-27 school year by the end of the fiscal year June 30. The operating budget for the current school year is $547 million.
EPISD Deputy Superintendent David Bates will oversee the budget while the district searches for an interim and permanent CFO, district officials said in a statement.
EPISD Board President Leah Hanany said trustees were notified about Aguirre’s resignation this week. She said the district plans to give the public more information on the current year’s budget during a board meeting later this month.
“The board was also notified of a potential budget shortfall for the 2025 budget, but we don’t have final numbers yet. My understanding is that we are still primed to pass a balanced budget for fiscal year 2026-27 in June,” Hanany said in a statement.
Aguirre could not be reached for comment. EPISD’s CFO makes $148,200 to $209,900 a year, according to the district’s administrative pay plan.
She served as EPISD’s interim superintendent from June to December 2025 after the district’s former superintendent, Diana Sayavedra, resigned under pressure from the board. She returned to her position as CFO when Brian Lusk was hired as EPISD’s new permanent superintendent.
Aguirre’s resignation comes amid an uncertain budget season after a state funding calculation error tied to school property tax breaks caused EPISD to lose out on $17 million in projected revenue. In late April, EPISD officials estimated it would cause the district’s spending to exceed its revenue next year by $10 million.
The district is also considering calling for a bond election in November to upgrade its aging campuses as part of the larger 2024 Destination District Redesign initiative to close schools and improve the ones that remain open.
El Paso Teachers’ Association President Norma De La Rosa said Aguirre’s departure was unexpected.
“We’re right in the middle of the committee meetings for a possible bond and getting ready to get that budget to the June board meeting for next school year. So, to say that I’m highly surprised is an understatement,” De La Rosa told El Paso Matters.
Aguirre started working with the district in 1996 as a general clerk, according to a video published by the district.
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