There is no separate tax rate for bonuses. A bonus is ordinary wages, taxed on your return at the same rates as your salary. What feels different is the withholding: your employer either takes a flat 22% for federal income tax, or works it out as if the bonus were part of a normal paycheck.
Social Security and Medicare come out on top of either method. Once your bonus total for the year passes $1,000,000, the part above it is withheld at 37%, whatever your W-4 says.
The two methods, on one bonus
IRS Publication 15 calls bonuses, commissions and similar one-off payments supplemental wages. When a bonus is paid separately, or listed as its own line on the stub, the employer can pick either method below. The flat rate is only allowed if income tax was withheld from your regular pay this year or last year.
Here is a December bonus for an invented office manager at a Reno dental practice. Nevada has no state income tax, so every line is federal.
| Bonus check | Flat 22% | Aggregate |
|---|---|---|
| Bonus | $5,000.00 | $5,000.00 |
| Federal income tax withheld | $1,100.00 | $1,144.54 |
| Social Security (6.2%) | $310.00 | $310.00 |
| Medicare (1.45%) | $72.50 | $72.50 |
| Net bonus | $3,517.50 | $3,472.96 |
Aggregate working: withholding on $2,450.00 + $5,000.00 as one biweekly payment is $1,354.69; on the $2,450.00 salary alone it is $210.15. The bonus carries the difference, $1,144.54.
The flat method ignores the W-4 entirely: 22%, no other percentage. The aggregate method uses the W-4 and the normal withholding tables, so it treats this paycheck as if every paycheck in the year were that large. That assumption is what makes the two results differ.
Why a bigger bonus loses a bigger share to aggregate withholding
On a small bonus, the aggregate method can take less than the flat rate, because the combined paycheck still sits in a low bracket. On a large one, the tables see a paycheck that would add up to a much higher salary, and withhold at that higher bracket.
| Bonus | Flat: federal | Flat: net | Aggregate: federal | Aggregate: net |
|---|---|---|---|---|
| $1,000 | $220.00 | $703.50 | $209.23 | $714.27 |
| $5,000 | $1,100.00 | $3,517.50 | $1,144.54 | $3,472.96 |
| $10,000 | $2,200.00 | $7,035.00 | $2,729.44 | $6,505.56 |
| $25,000 | $5,500.00 | $17,587.50 | $8,023.28 | $15,064.22 |
Same employee, same W-4, four bonus sizes. The flat column grows in a straight line. The aggregate column starts below it and ends well above it, which is why a large bonus paid this way can look as if it was taxed at a rate you have never paid.
What the bonus really costs you at tax time
Withholding is a prepayment, not the tax itself. When you file, the bonus is simply added to your wages for the year and taxed at your own brackets. Whatever was withheld counts toward that bill, and the return settles the difference.
| Federal income tax | Flat 22% | Aggregate |
|---|---|---|
| Withheld from the bonus | $1,100.00 | $1,144.54 |
| Tax the bonus adds for 2026 | $820.00 | $820.00 |
| Settled on the return | $280.00 back | $324.54 back |
For this employee, both methods take more than the bonus adds to the year’s tax, so the gap comes back as part of the refund. With a higher salary, other income or a two-earner household, the result can go the other way. The IRS Tax Withholding Estimator shows where you stand before the year ends.
FICA and state withholding on a bonus
Social Security takes 6.20% and Medicare 1.45% of the bonus, exactly as from salary, under either method. Social Security stops for the year once your wages reach $184,500, so a late-year bonus for a high earner may carry none. Above $200,000 of wages, the employer also withholds an extra 0.9% of Medicare.
States set their own rules. Some have a flat supplemental rate of their own, others use their normal tables, and a few have no tax on wages at all. Your stub shows the state amount on its own line, separate from the federal one.
Bonuses above the yearly threshold
The 37% rule is mandatory and counts every supplemental payment made to you in the calendar year, from all businesses under common control. The flat rate still applies to the part of a payment that fits under $1,000,000; only the part above it moves to the higher rate.
| Part of the bonus | Amount | Rate | Withheld |
|---|---|---|---|
| Up to $1,000,000 for the year | $100,000 | 22% | $22,000.00 |
| Above $1,000,000 | $150,000 | 37% | $55,500.00 |
| Federal income tax withheld | $250,000 | $77,500.00 |
What counts as a bonus for withholding
Supplemental wages are any wage payments outside your regular pay. Publication 15 lists bonuses, commissions, overtime pay, payments for accumulated sick leave, severance pay, awards, prizes, back pay, retroactive pay increases and reported tips among them. Employers may instead treat overtime pay and tips as regular wages.
A gift card is never a tax-free gift from an employer. IRS Publication 15-B treats cash and cash equivalents such as gift cards as wages, however small, so a holiday card goes through payroll like any other bonus.
For employers paying a bonus
- Pick the method before the run. The flat rate needs the bonus shown as its own amount and income tax withheld from the employee’s regular wages this year or last. Otherwise use the aggregate method.
- Use the rate as written. The flat method allows 22% and no other percentage, even if the employee asks for more or less.
- Put it on the stub as its own line. A separate bonus line lets the employee check the withholding, and the year-to-date column shows the extra gross pay.
- Check the overtime rate. A bonus promised for hours, output or attendance is part of the regular rate for overtime that week. The overtime guide works through one.
To issue the stub, the free pay stub generator has a bonus earnings line and carries it into the year-to-date totals. For what each tax code on the stub stands for, see FIT on a paycheck and FICA.
Sources: IRS Publication 15 (2026), section 7, Supplemental Wages; IRS Publication 15-T (2026), Federal Income Tax Withholding Methods; IRS Publication 15-B (2026), Employer’s Tax Guide to Fringe Benefits; IRS Tax Withholding Estimator; 29 CFR 778.209. Checked October 20, 2026.
