See how much of your bonus you actually keep after federal, state, Social Security, and Medicare withholding. New here? Read why your 2026 bonus check looks smaller for the line-by-line breakdown of where the money goes.
How Bonus Taxes Work
The IRS treats bonuses as supplemental income. Employers typically use the flat-rate method: withhold 22% for federal tax (37% for amounts over $1 million). This is just withholding -- your actual tax liability depends on your total annual income.
Federal Withholding = Bonus x 22% (flat supplemental rate)
State Withholding = Bonus x State Supplemental Rate
Social Security = Bonus x 6.2% (up to wage cap)
Medicare = Bonus x 1.45%
Net Bonus = Gross Bonus - All Withholdings
Flat-Rate vs. Aggregate Method
Flat-Rate (22%): Most common. Simple flat percentage on the bonus amount. Used here.
Aggregate Method: Combines bonus with regular paycheck, calculates withholding on the combined amount. Can result in higher withholding.
Both are just withholding methods -- your actual tax is calculated on your annual return.
Frequently Asked Questions
No. Bonuses are taxed as ordinary income at your marginal rate. However, the withholding rate is different -- employers typically withhold a flat 22% for federal tax on bonuses. If your actual tax bracket is lower, you will get the difference back as a refund.
The federal supplemental withholding rate is 22% for bonuses up to $1 million. For amounts over $1 million, the rate is 37%. These are withholding rates, not your actual tax rate.
You can reduce the tax impact by contributing to pre-tax accounts (401k, HSA), timing deductions strategically, or asking your employer to use the aggregate withholding method if your regular income is in a lower bracket.
Yes. Social Security tax (6.2%) applies to bonuses unless you have already reached the annual wage cap ($176,100 in 2025). Medicare tax (1.45%) applies to all bonus income with no cap.
If the 22% flat withholding rate is higher than your effective federal tax rate, you will receive the excess back as a refund when you file your annual return. This is common for lower-income earners.
The 22% flat rate is only for withholding purposes. Your actual tax depends on your total annual income and tax bracket. Many people get a portion of the withheld amount back at tax time.