A new report has found that the average year-end bonus for 2025 was much more generous and widespread than the previous year within the nation’s small business sector.
The 2025 Year-End Bonus report from Gusto, which manages payroll, HR and benefits needs for small businesses, found that the average bonus paid to employees at U.S. small businesses increased 11.5% in December 2025 compared with December 2024. This figure well outpaces inflation, which hovered around 3% for most of the year.
According to Tom Bowen, senior economist at Gusto, the report found that organizations didn’t just cut larger checks but also dispersed bonuses to more workers. For example, he notes that the share of employees at small businesses receiving a bonus rose to 18%, up eight percentage points from the prior year, indicating broader bonus coverage.
This underscores the role bonuses can play as a key retention and employee-satisfaction tool, especially for high performers.
“At the same time, this broader use of bonuses reflects growing optimism among small business owners as economic uncertainty continues to ease,” he adds. “With interest rates coming down, inflation leveling out and hiring holding steady across SMBs, business owners appear increasingly confident in the outlook ahead.”
Bowen says growth in bonus payments was widespread across industries, with particularly strong gains in experience-driven industries: Tourism and accommodations (+52%) and entertainment and recreation (+45%) posted the largest increases, far exceeding the overall average.
Bonus growth, however, was not limited to customer-facing industries, according to Bowen, who adds that many knowledge workers also saw substantial increases. Employees in the professional services and technology sectors, for example, received significantly larger average bonuses in 2025 than they did in 2024.
Bowen explains that for HR leaders, this trend suggests that many small businesses ended the year on a solid footing and are using bonuses not only to reward employees for their hard work, but also to share success in a “transparent, timely way” that directly reflects business performance.
The firm’s end-of-year bonus data suggest that 2025 was a strong year for many small businesses, despite consumer pessimism and weak job gains. These increases likely reflect strong business performance and solid worker productivity, which could be in part thanks to AI.
Bowen says the findings also are backed up by the company’s December SMB jobs report, which showed a strong bounceback in hiring among America’s small businesses, with 47,900 new jobs added.
“While the year was marked by significant uncertainty, economic conditions finished the year on firm footing,” he says. “When revenues are strong and year-end results exceed expectations, bonuses are often the simplest and most flexible way for employers to share gains with employees.”
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