Admins with the right permissions can run an extra pay payroll—also called a bonus payroll—outside of a regular pay schedule. We do not charge extra fees for this.
You can use an extra pay payroll to:
Pay missed wages from a past payroll.
Pay bonuses, commissions, or other extra pay on top of regular wages.
Pay reimbursements, advancements, or other wages.
Eligible bonus payrolls may qualify for Same-day Pay or Instant Pay, so your team can be paid the same day or within minutes instead of waiting for a standard deposit. See Direct deposit payment speeds in Gusto for eligibility and cutoff times.
Your Gusto experience may look different from what is shown in this video.
Click the dropdowns below to learn more.
Important: Overtime and certain bonus types affect each other when they apply to the same pay period. If a team member works overtime and also earns a bonus, the overtime rate may change. For example, a bonus payroll covering a full month may produce up to four overtime adjustments per team member — one for each workweek.
The Department of Labor (DOL) defines two bonus types.
Discretionary bonuses are optional and not promised to team members. Examples:
Reward for handling a tough situation
Recognition for extra effort (without set rules)
Employee-of-the-month
Referral bonus for non-recruiters
Important: According to the DOL, discretionary bonuses should not be included in overtime pay calculations. You need to set up a custom earning before running a discretionary bonus payroll. This tells Gusto to exclude the bonus from overtime calculations. If you skip this step and enter the bonus directly in the payroll spreadsheet, we will treat it as non-discretionary and overtime adjustments may be created.
To give a discretionary bonus, follow these steps.
Create a custom earning in Gusto.
Use Other as an earning type. You'll have the option to include or exclude the earning in overtime pay.
Enter the bonus amount you want to pay.
Run the bonus through:
A regular payroll, or
An off-cycle (extra pay) payroll.
Before you submit payroll, confirm the bonus appears under the Custom Earnings tab — not the Bonus tab.
When set up this way, we exclude discretionary bonuses from overtime calculations.
Non-discretionary bonuses are expected by team members when goals or rules are met. An employer may choose not to pay one, but that does not make it discretionary. Examples:
Based on a set formula (team or individual production)
Quality or accuracy bonuses
Performance bonuses
Attendance or safety bonuses
Important: According to the DOL, non-discretionary bonuses should be included in overtime pay calculations.
To give a non-discretionary bonus, add the bonus amount in the Bonus column during regular payroll. This applies to both hourly and salaried team members.
Note:
Garnishment rules may apply if a team member has wage garnishments on a bonus.
Time tracking does not sync with extra pay payrolls.
Time off does not sync with extra pay payrolls.
By default, we tax bonuses at the 22% federal supplemental tax rate the IRS sets. You can change this tax rate when you run an extra pay payroll.
Important: Use the same tax method every time you run a bonus payroll. Switching methods between team members or payrolls can create compliance risks — the IRS may question inconsistent treatment. Make sure your payroll records show a consistent approach for similar bonus payments.
Adding a bonus to a regular payroll taxes the amount as regular wages.
Multnomah County, Oregon: Separate extra pay payrolls default to 0% for the Preschool For All tax unless team members opt in using this form and update their Oregon W-4 in Gusto.
After the extra pay payroll, team members may want to reset their tax preferences for future payrolls.
We do not recalculate Multnomah County taxes if corrections are made to past payrolls — team members need to pay any owed taxes directly to the county.
When you set up an extra pay payroll, you need to select a pay period. Choose the period that matches what the bonus is based on. Common examples:
Annual bonus — use the full year (Jan. 1 – Dec. 31).
Production or sales bonus — use the time measured (month or quarter). We spread the bonus across all workweeks in that period.
Attendance bonus — use the time measured for attendance.
Referral bonus — use one workweek only, since it is paid at a single point in time.
Signing bonus — use the first workweek of employment. No breakdown is needed.
Pro Tip: Watch a quick video on how to run an extra pay payroll. Your Gusto experience may look different from what is shown.
To run an extra pay payroll:.
Go to Pay.
On the right, click Run an extra pay payroll.
Tell us why you're running this extra pay payroll. We'll recommend how to handle taxes and benefits based on what you pick. You can choose:
Fix a mistake from a previous payroll — pay missed wages.
Give extra pay — bonuses, commissions, or other pay on top of regular wages.
Other — reimbursements, advancements, or any other regular wages.
Add who you want to pay individually or click Select all. You can search, filter, or click names to select.
Tell us what period the payment applies to. Choose from:
Use a pay period based on your regular schedules.
Choose dates from a calendar.
Pick a pay date on the calendar. We'll show you the soonest available date based on your direct deposit speed.
If you need a check date in the past, see recording past payrolls.
(Optional) Give the payroll a name to keep a clear record.
Click Continue.
Review all advanced settings. Click Edit to change any of them. For specific guidance on records or tax filings, check with an HR expert. Here's some information about your options:
Entry type (net vs. gross pay)
Hours and earnings — enter what each team member makes before taxes, just like a regular payroll.
A net pay amount — enter what each team member will take home after taxes. You might use this for lump sum payments, like bonuses or severance.
Deductions and contributions
Don't include (most common) — these are handled in regular payrolls and likely won't need to be included now.
Include — we'll make all your normal benefit deductions and contributions. If your benefits are managed by Gusto, your standard benefits will not be automatically applied unless you choose to include them.
Note: We cannot turn off 401(k) deductions and contributions — most plan agreements require them, including the Gusto 401(k) powered by Guideline and integrated 401(k)s with Betterment, Human Interest, Vestwell, and other partners. For 401(k) plans managed outside of Gusto, update team members' elections before running this payroll.
Tax witholding rate — the IRS recommends a flat 22% rate for federal taxes. State income tax is based on each team member's state.
Same as regular wages — we'll combine regular and extra wages and withhold taxes at a weekly rate. Team members will get higher take-home pay now but may owe more when they file their tax returns.
Select which rate to apply to these added wages — the rate of the regular pay schedule is applied by default.
Click Create payroll.
Enter the extra pay in the table, or click Switch to legacy view to enter payments that way.
If you do not see the column you need for a specific earning type, click Columns above the table to show it.
If a team member has multiple jobs or pay rates, click the arrow to the left of their name to view their different jobs and enter data.
If you're using the Gusto mobile app, tap Edit next to the team member's name to edit their hours or earnings. When you're done, tap X or Done — either saves your changes.
Choose a bank account if you have more than one set up.
When you're ready, click Review summary. If you need to change any extra pay payroll details — like the people included or tax rates — click Edit settings.
Expand the sections below to review taxes, wages, and the company debit amount. You need to have the full debit amount available in your bank when you submit payroll. If the debit fails, we'll add a failure fee to your next invoice.
Click Submit payroll. If you need to make changes, click Go back.
If paying by check, print and deliver it to the team members.
Use the confirmation page to access related payroll details:
Click See the full summary to get a summary of the payroll.
Click Cancel this payroll to cancel it or make changes.
Expand the What your team worked and take home section, then scroll to the bottom right to find and print checks.
Expand the What will get taxed and debited section to download a Cash Requirements summary or a CSV.
You'll get a confirmation email. To view past extra pay payrolls, go to Pay, then View Pay History.