How bonuses are taxed
Why your bonus feels so heavily taxed
A bonus is not taxed at a higher rate than your salary in the long run — but withholding on it is often higher, which is why the check looks smaller than you expected. The IRS treats bonuses as supplemental wages and lets employers withhold using a flat 22% federal rate (rising to 37% on amounts over $1 million in a year).
Flat method vs. aggregate method
Employers can withhold on a bonus two ways. The flat (percentage) method simply takes 22% federal. The aggregate method lumps the bonus with your regular paycheck and withholds based on your W-4, which can withhold even more up front. Either way, the actual tax is settled when you file — if too much was withheld, you get it back as a refund.
Reduce the tax bite
You can defer part of a bonus into a 401(k) or HSA to lower current taxable income. See how much a contribution changes your paycheck with our gross-to-net calculator.
Questions
Bonus Tax Calculator FAQ
How are bonuses taxed in 2026?
Bonuses are supplemental wages. Under the IRS flat method, employers withhold 22% federal income tax (37% on amounts over $1 million per year) plus 6.2% Social Security and 1.45% Medicare. The actual tax owed is reconciled when you file your return.
Is a bonus taxed at 40%?
No, there is no 40% bonus tax. It can feel that high because withholding combines 22% federal, 7.65% FICA and any state tax. But a bonus is ordinary income — if too much was withheld, you get the excess back as a refund.
Why was so much taken out of my bonus?
Most employers use the 22% flat supplemental withholding rate, which is higher than the effective rate many people pay on their salary. The over-withheld amount is returned when you file if your real bracket is lower.
How can I pay less tax on a bonus?
Defer part of the bonus into a pre-tax 401(k) or HSA to lower taxable income, or ask whether your employer can spread it across pay periods. The tax itself is settled on your annual return regardless of the withholding method.
- Sources: IRS Publication 15 (supplemental wage withholding: 22% flat, 37% over $1M) · SSA 2026 FICA rates.
- 🔄 Last updated June 14, 2026 · Tax year 2026
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