What is better: A raise or a bonus?

From an income tax point of view it doesn't make any difference if what you receive is a pay rise OR a bonus - you'd get taxed the same. This wouldn't change if the raise took your salary over the 30K mark.

Other things you could consider... If you have a student loan that you are are not paying back yet (because you can defer if your income is below a certain limit), this might be something to consider. My husband has an 'old style' student loan which he doesn't have to start paying back until his income is over a certain limit... recently his 'one-off' of overtime & expenses would have taken him over that limit but they have not been included as his 'salary' by his student loans company.

If you receive a raise and pay a % of your salary into a pension, the amount you pay into the pension will increase. I assume this would be the same if you received a bonus, but I don't know for sure - maybe something to look into if the raise/bonus is going to be a large one?

Would the bonus be a one-off payment made in one go, and the raise spread throughout the year? Would it make a huge difference to you to receive the money in one go?

PS Personally I'd pick the raise. lol

I believe bonuses are initially taxed at a higher percentage than your normal paycheck. But you should get the overpyament back after you file your taxes.

But I think a raise is better. It creates a higher raise for future raises.

For example, if you earn $50,000 a year and you decide to take a raise instead of the bonus this year. And let's say this raise is 10%, then your income is now $55,000. The next time you get a raise, it is based on $55,000 instead of $50,000.

Additionally, if you have a 401K and you have a company match, then your 401K employer match is also higher.

I don't know about the tax point of view, but a raise will mean you get more cash each year, plus if you get made redundant in the future your pay-off will depend on your salary. A bonus might well be a one-off payment.

a raise is better because it is permanent a bonus is not

In this economy, a raise is best.