Bonuses are taxed like salary; only withholding is different
There is no special bonus tax rate. The IRS treats bonuses, commissions, and similar payments as supplemental wages, and they are added to your salary on your W-2 and taxed at the same federal brackets: 10%, 12%, 22%, 24%, 32%, 35%, and 37% for 2026.
The number people call the "bonus tax rate" is a withholding rate. Withholding is a prepayment toward the tax you will owe for the year. If your employer withholds more from a bonus than the bonus actually adds to your tax bill, you get the difference back as a refund; if it withholds less, you owe the difference when you file.
That is why a bonus can feel overtaxed on payday and still come out fine in April, or look fine on payday and leave you with a balance due.
The two federal withholding methods: flat and aggregate
Employers choose between two methods for bonuses up to one million dollars a year. The percentage method, often called the flat rate, withholds exactly 22% of the bonus for federal income tax, regardless of your filing status or W-4 entries. Employers can use it only when the bonus is identified separately from regular pay and income tax was withheld from your regular wages this year or last.
The aggregate method adds the bonus to a regular paycheck, either the current one or the most recent one, and figures withholding as if the combined amount were your normal pay for that period. It then subtracts what was or will be withheld on the regular wages and withholds the rest from the bonus.
The aggregate method often withholds more, and it is behind most complaints that a bonus was taxed too high. Payroll software annualizes the combined check as if you earned that much every pay period, which can push the calculation into a higher bracket than your real annual income. The extra comes back when you file, assuming your W-4 is otherwise accurate.
Bonuses above one million dollars: 37%
Once your supplemental wages from one employer pass one million dollars in a calendar year, the employer must withhold federal income tax at 37% on the excess. This is mandatory, and the employer applies it without regard to your Form W-4. Supplemental pay from businesses under common control counts toward the threshold.
Since 37% is also the top 2026 bracket, which starts at $640,600 of taxable income for a single filer, the mandatory rate usually lines up with the tax actually owed on those dollars.
Is 22% too much or too little? Examples by salary
The table compares what the flat 22% withholds on a $5,000 bonus with the extra federal income tax the bonus actually adds, for a single filer taking the standard deduction. In every row the withholding is $1,100; what changes is the bracket the bonus lands in.
On a $40,000 salary, the bonus is taxed at 12%, so it adds only $600 of tax. The 22% withholding takes $1,100, and you get $500 back when you file. At $75,000, the bonus falls in the 22% bracket, so the flat rate is right on target and the difference is $0.
Higher earners see the opposite. At $150,000, the bonus is taxed at 24%, adding $1,200 of tax, so you owe $100 more at filing. At $250,000, the 32% bracket turns the bonus into $1,600 of tax and a $500 balance due. If you earn in the 24% bracket or above, plan for that gap. The bonus tax calculator runs these numbers for your own salary and bonus.
| Base salary | Federal withheld (22%) | Actual federal tax on bonus | Refund (+) or owed (-) |
|---|---|---|---|
| $40,000 | $1,100 | $600 | +$500 |
| $75,000 | $1,100 | $1,100 | +$0 |
| $150,000 | $1,100 | $1,200 | -$100 |
| $250,000 | $1,100 | $1,600 | -$500 |
Why your bonus check is smaller than you expected
Federal income tax is only one of several deductions. Social Security (6.2%) and Medicare (1.45%) also apply to bonuses, regardless of the withholding method. On a $5,000 bonus with the flat method, that is $1,100 of federal income tax and $382.50 of payroll tax, leaving $3,517.50 before any state or local tax.
States that tax wages also withhold from bonuses under their own rules, which vary from state to state. That state withholding comes on top of the federal amounts above.
Retirement and benefit elections can apply too. If your 401(k) election covers bonuses, part of the bonus goes to your plan before income tax withholding, which lowers the check but also lowers the tax. Some employers also collect benefit deductions from a bonus check.
High earners: the wage base and Additional Medicare Tax
Social Security tax stops once your wages for the year reach $184,500. If your salary is already above that, a bonus adds no Social Security tax over the year, though it may still be withheld if the bonus is paid before your year-to-date wages cross the line. Medicare has no cap.
Above $200,000 of wages, the 0.9% Additional Medicare Tax applies on top of the regular 1.45%, and your employer starts withholding it once your year-to-date wages pass that line. On a $250,000 salary the whole bonus sits above it for the year, so the bonus owes both Medicare rates but no added Social Security tax.
How to avoid a surprise at tax time
If you earn in the 24% bracket or higher and expect a large bonus, the flat rate will likely under-withhold. You can add extra withholding in Step 4(c) of your Form W-4 for the rest of the year to cover the gap. Our W-4 guide walks through each step.
If you are in the 10% or 12% bracket, the flat 22% usually over-withholds, and the excess returns as a refund. You cannot ask for less than 22% under the flat method, but your regular paycheck withholding still follows your W-4.
Raising your 401(k) contribution for the bonus period is the one move that cuts the tax itself, not just the timing. A traditional 401(k) deferral, up to the $24,500 limit for 2026, lowers federal taxable income dollar for dollar. Use the take-home pay calculator to see what your regular paychecks look like after the change.