Is a Raise or a Bonus Better After Taxes

A $5,000 raise on an $80,000 salary adds about $3,500 a year after federal, state, and FICA taxes, while a $10,000 bonus nets about $7,000 once. Over 5 years the raise cumulatively beats the bonus (about $17,600 vs $7,000), and over 10 years the gap widens to about $35,200. The raise wins on a multi-year horizon because it repeats; the bonus wins only as a one-time lump. Pick the raise if you will stay, the bonus if you need cash now.