A bonus paid separately from your regular wages is withheld at a flat 22% federal rate for the first $1 million of supplemental wages, and at 37% for any amount above $1 million — regardless of your normal income tax bracket (IRC §3402(q); IRS Pub. 15-T 2026). Those rates are withholding estimates, not your final tax. At filing, your bonus income is added to your other wages and taxed at your marginal bracket. If too much was withheld, you get a refund.
Use the bonus tax calculator to estimate how much of your bonus you will keep based on your salary, filing status, and state.
Two Withholding Methods
Method 1 — Flat percentage (most common): The employer multiplies the bonus by 22% (or 37% above $1M) and withholds that amount, plus FICA.
Method 2 — Aggregate: The employer adds your bonus to one regular pay period, annualizes that combined amount, calculates the tax, and withholds the difference from what would have been withheld on regular pay alone. This typically results in higher withholding.
Employers choose the method; you generally cannot select it yourself. Both are acceptable under IRS rules, but the flat method is simpler and more common for discretionary bonuses.
Worked Example: $5,000 Bonus at $75,000 Base Salary
Assume a single filer earning $75,000 base, biweekly payroll, no pre-tax deductions.
Flat 22% withholding:
| Item | Calculation | Amount |
|---|---|---|
| Bonus | — | $5,000 |
| Federal withholding (22%) | $5,000 × 22% | $1,100 |
| Social Security (6.2%) | $5,000 × 6.2% | $310 |
| Medicare (1.45%) | $5,000 × 1.45% | $72.50 |
| Estimated bonus take-home | $5,000 − $1,482.50 | $3,518 |
Actual federal tax on the bonus (at filing):
This filer’s marginal rate is 22% (taxable income is around $58,900, within the $50,400–$105,700 single bracket). In this case the flat withholding happens to equal the actual marginal rate, so no refund or balance due on the bonus itself.
For a filer with lower income — say a $40,000 base — the 22% flat withholding would exceed their actual marginal rate (12%), and they would get a partial refund.
Bonus Tax at Different Income Levels
| Base Salary | Filing Status | Marginal Rate | Flat Withholding | Likely Outcome |
|---|---|---|---|---|
| $40,000 | Single | 12% | 22% | Refund likely |
| $75,000 | Single | 22% | 22% | Even |
| $110,000 | Single | 24% | 22% | May owe more |
| $210,000 | Single | 32% | 22% | May owe more |
| $300,000 | Single | 35% | 22% | May owe more |
If your bonus withholding at 22% is less than your actual marginal rate, you may owe additional tax at filing. To avoid an underpayment penalty, you can request additional withholding on Form W-4 earlier in the year, or make an estimated tax payment.
Large Bonuses Over $1 Million
Supplemental wages above $1 million in a calendar year from a single employer are withheld at the mandatory 37% rate under IRC §3402(q). If you receive a $1.2 million bonus:
| Tranche | Rate | Withholding |
|---|---|---|
| First $1,000,000 | 22% | $220,000 |
| Next $200,000 | 37% | $74,000 |
| Total federal withholding | $294,000 |
The $1 million threshold is cumulative for all supplemental wages from that employer in the calendar year — sign-on bonuses, year-end bonuses, and commissions all count toward the total.
FICA on Bonuses
FICA applies to bonuses the same way it applies to regular wages:
- Social Security (6.2%) up to the $184,500 wage base (combined with your regular wages)
- Medicare (1.45%) on the full bonus
- Additional Medicare Tax (0.9%) if your total wages for the year exceed $200,000 (single)
If you have already reached the $184,500 Social Security wage base before receiving your bonus, no additional Social Security is owed on the bonus — only Medicare applies.
Timing Strategy
Because withholding and actual taxes can diverge, some employees ask their employer to pay a bonus at the start of the following year to shift the income into the next tax year. This can help if you expect lower income next year, but it only defers the tax — it does not eliminate it. The decision involves other factors like investment returns on after-tax cash and state tax rules. Consult a tax professional before deferring significant compensation.
For commission income, which is treated similarly, see how commission is taxed. For how a raise affects your take-home rather than a lump sum, see how to calculate a raise.