Few things in working life feel as good as a year-end bonus landing in your bank account. In Singapore, many employees receive a 13th-month payment, often called the Annual Wage Supplement (AWS), along with a performance bonus. But the amount that actually reaches your account is smaller than the figure on your bonus letter, because both income tax and CPF take a share.
This guide explains how AWS and bonuses are taxed in Singapore, how CPF applies to them, and how to work out what you will really keep. Understanding this helps you avoid disappointment in January and plan your spending or saving sensibly.
What Is the Annual Wage Supplement?
The Annual Wage Supplement is a single annual payment, usually equal to one month's basic salary. It is sometimes written into your employment contract as a fixed 13th-month payment, and sometimes paid at the employer's discretion. It is not required by law, but it is a long-standing custom that many companies follow.
A performance bonus is different. It is paid based on how well the company and you have performed during the year. Together, AWS and your performance bonus make up what most people simply call their year-end bonus.
Both AWS and performance bonuses count as part of your income. That means they are subject to income tax, and they also attract CPF contributions, within limits we will explain below.
How CPF Applies to Your Bonus
Your monthly salary is treated as ordinary wages, while bonuses and AWS are usually treated as additional wages. CPF applies to both, but additional wages have their own annual ceiling.
The Additional Wage Ceiling is calculated as $102,000 minus your total ordinary wages for the year. In plain terms, the more you earn in monthly salary, the less of your bonus is subject to CPF. For many middle-income earners, the whole bonus attracts CPF; for high earners whose monthly salary is already large, part of the bonus may fall outside CPF.
When CPF does apply, the rates are the same as for your salary. For a worker aged 55 and below, that is 20% from you and 17% from your employer. So a $5,000 bonus that is fully subject to CPF would have $1,000 deducted as your share, with your employer adding $850 on top into your CPF accounts. To see how this plays out for your own figures, use our bonus tax calculator.
How Income Tax Applies to Your Bonus
Singapore does not tax bonuses with a separate, higher rate the way some countries do. Instead, your bonus is simply added to your total income for the year and taxed under the normal progressive rates.
What this means in practice is that a bonus can be taxed at your marginal rate — the rate on your top dollars of income. If your salary already places you in the band taxed at 15%, then roughly 15% of your bonus goes to income tax. If you are in a lower band, less is taken.
It is important to remember the timing. The tax on a bonus you receive in December 2025 is not deducted on the spot. Instead, it is included in your YA 2026 assessment and billed the following year. This catches people out: the bonus arrives now, but the tax bill comes months later. It is wise to set aside part of a large bonus for that future tax.
Working Out What You Actually Keep
Let us walk through a simple example. Suppose you are 35, earn $5,000 a month, and receive a one-month AWS of $5,000 plus a $5,000 performance bonus, for a total bonus of $10,000.
- CPF: your 20% share comes to about $2,000, assuming the bonus is within the additional wage ceiling
- Income tax: at a marginal rate of around 11.5%, roughly $1,150 will eventually be due on the bonus
- What lands in your account now: about $8,000 after CPF, with the tax payable later
So a $10,000 bonus feels like $8,000 in your account today, and after you settle the related tax next year, your true take-home from the bonus is closer to $6,850. The CPF portion is not lost, of course — it is sitting in your retirement and housing accounts — but it is not cash you can spend immediately.
Smart Ways to Use Your Bonus
A bonus is a chance to make a financial leap rather than just a spending spree. A few ideas worth considering:
- Top up your SRS account before year end to claim a tax deduction and reduce next year's bill
- Make a voluntary CPF top-up to your Special Account or a family member's account for additional relief
- Build or rebuild your emergency fund so you have three to six months of expenses set aside
- Clear high-interest debt such as credit card balances before saving or investing
Each of these uses your windfall to strengthen your finances rather than letting it disappear. The SRS and CPF options have the added bonus of cutting your tax.
Comparing Job Offers With Bonuses
Bonuses make comparing job offers tricky. A role with a lower base salary but a guaranteed 13th-month payment and a strong performance bonus can beat a higher base with no bonus. The headline salary alone does not tell the full story.
When weighing two offers, look at the total annual package including AWS, expected bonus, and employer CPF, then compare the after-tax, after-CPF figures. Our salary comparison calculator lets you put two packages side by side so you can see which one genuinely leaves you better off.
The Bottom Line
Your AWS and bonus are taxed like the rest of your income, added to your yearly total and assessed at your normal rates, with CPF taken on top within the additional wage ceiling. Expect to keep roughly two-thirds to three-quarters of a bonus once CPF and tax are accounted for, and remember the tax bill arrives the following year. Run the numbers through our bonus tax calculator before you start spending, and put part of your windfall to work in SRS, CPF, or your emergency fund.