Sign-On Bonus vs Higher Salary

A big sign-on bonus is tempting, especially when you're starting out or relocating. But a higher salary keeps paying every year, and raises are usually a percentage of base pay. This calculator compares the two over the time you expect to stay, including what you'd have to repay if you leave early.

What this calculator does

For Offer A, enter the salary, the sign-on bonus and its commitment period. For Offer B, enter the higher salary. Then enter the yearly raise and how long you expect to stay. The calculator shows:

• which offer pays more over your stay, and by how much,
• the total for each offer,
• when the higher salary catches up, and
• the federal withholding on the bonus.

The formula in plain English

Salary total = salary in year 1 + salary × (1 + raise) in year 2 + … for each year you stay. Partial years count proportionally.

Bonus kept = the full bonus if you stay through the commitment period. If you leave early, the calculator assumes you repay it pro rata: bonus × (years stayed ÷ commitment period) is kept.

Offer A = salary total + bonus kept. Offer B = salary total at the higher salary.

Catch-up point = the first half-year at which Offer B's total equals or passes Offer A's.

A worked example

Alex, a new grad nurse practitioner, has two offers.

• Offer A: $95,000 plus a $15,000 sign-on bonus with a 2-year commitment.
• Offer B: $100,000, no bonus.

Both give 3% raises, and Alex expects to stay 3 years.

• Offer A total: about $308,600.
• Offer B total: about $309,100.
• Offer B comes out about $450 ahead, and catches up at about 3 years.

If Alex stays only 2 years, the bonus wins by about $5,000. If Alex stays 5 years, the higher salary wins by more than $11,000, and the base is $5,000 higher for future raises.

Why it matters at each career stage

If you're: Student

New grads often focus on the bonus. Think about how long you'll realistically stay. Many people leave their first job within two or three years.

If you're: Resident / fellow

Attending offers sometimes include large signing or relocation bonuses tied to multi-year commitments. Compare them with a higher base, and check how the clawback works if the job isn't a good fit.

If you're: Employed

Switching jobs? A bonus can help cover a gap in pay or moving costs. But if you'd stay longer than the commitment, a higher base usually wins, and it raises your retirement match and future raises too.

Read the commitment terms

Before you accept a bonus, ask for the exact repayment terms in writing. Questions to ask:

• Is the repayment prorated, or is the full bonus due if you leave even one day early?
• Does repayment apply if you're laid off or your position is eliminated?
• Is the bonus paid all at once, or in installments over the first year?
• Are taxes withheld on the repayment, and how is a repayment handled at tax time?

Beyond the bonus

Retirement match. A match is usually a percentage of salary, not bonuses, so a higher base adds to it.

Overtime. For hourly workers, overtime is based on the hourly rate, so a higher base raises overtime pay.

Future offers. Your next employer may ask about your current salary. A higher base can set a higher starting point.

Cash now. If you need money for a move, a security deposit or paying off a high-rate card, a bonus has real value even if it's slightly less overall.

Next, compare full packages with the job offer comparison, check your take-home pay, and see how taxes on extra income work.