See how much of your bonus you actually keep after federal, state, Social Security, and Medicare withholding.
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.