Skip to main content
PayslipIQUSA
EnglishEspanol (Beta)
PI
Reviewed by PayslipIQ Editorial Team, in-house payroll editor
Last reviewed May 2026 · Editorial standards

Why Is My Bonus Taxed at 22 Percent?

The 22 percent figure on a US bonus is not a tax rate. It is the federal supplemental withholding rate. Two methods exist for withholding on supplemental wages. Most employers use the percentage method.

In short

A US bonus is usually withheld at a flat 22% federal supplemental rate (37% on amounts over $1,000,000), plus FICA (Social Security 6.2% up to the 2026 wage base of $184,500, and Medicare 1.45%). That 22% is withholding, not your final tax. Employers can instead use the aggregate method, which lumps the bonus into a regular paycheck and often withholds more. Either way, your actual tax is settled when you file, so over-withholding comes back as a refund. The calculator below shows both methods side by side.

PayslipIQ provides educational information and estimated calculations only. It does not provide tax, legal, financial, accounting, employment, benefits, or payroll advice. PayslipIQ is not a CPA firm, law firm, financial advisor, payroll provider, or tax authority. Always verify your paycheck, deductions, withholdings, and tax position with your employer's payroll department, a qualified CPA, the IRS, your state tax authority, or another appropriately qualified professional. Calculations are estimates; your actual paycheck may differ based on factors specific to your employer, location, benefits elections, and personal tax situation.

State supplemental rules vary. Some states use a flat supplemental rate, some use the aggregate method, some tax bonuses exactly like regular wages. This tool applies your state's most recently verified effective rate as a directional estimate only.

Method A

Percentage (flat) method

22% federal flat rate. What most employers use.

Net bonus (take-home)
$6375.00
Bonus$10000.00
Federal supplemental (22%)−$2200.00
FICA (SS + Medicare)−$765.00
State (est.)−$660.00
Effective withholding rate36.3%
Method B

Aggregate method

Bonus added to a regular check, then taxed.

Net bonus (take-home)
$5763.30
Bonus$10000.00
Federal withholding (on bonus)−$2811.70
FICA (SS + Medicare)−$765.00
State (est.)−$660.00
Effective withholding rate42.4%

Average vs. marginal federal rate (aggregate scenario)

Average federal rate on bonus
731.0%
Marginal federal rate (top bracket hit)
35%

The average rate is the share of the whole bonus withheld for federal income tax. The marginal rate is the bracket the last dollar of the combined check lands in. Marginal is usually higher than average, which is why the aggregate method can withhold more than a flat 22%.

What counts as supplemental wages

Bonuses, commissions, severance, back pay, retroactive pay raises, awards and prizes, accumulated sick leave paid out, and overtime in some cases. Anything paid in addition to regular wages.

The percentage method

22 percent flat federal withholding on supplemental wages up to $1 million per year. 37 percent on amounts above $1 million. Easy to calculate. Predictable. Most employers use it.

The aggregate method

Add the supplemental wage to the regular paycheck. Calculate withholding on the combined amount as if it were a single regular paycheck. Subtract what would have been withheld on the regular wages alone. The remainder is the supplemental withholding.

Result is usually higher than the percentage method because the larger combined check pushes annualized income into a higher bracket.

State supplemental rates

Most states have their own supplemental withholding rate. They vary widely. Some use a flat percentage, some use the aggregate method, some treat supplemental wages identically to regular wages. Verify with your state.

FICA still applies

Bonuses are subject to Social Security (6.2 percent up to the wage base) and Medicare (1.45 percent on every dollar). Plus the 0.9 percent Additional Medicare on wages above $200,000.

Withholding versus tax owed

The 22 percent is withholding, not your actual tax rate. If your effective rate is below 22 percent, the over-withholding refunds at filing time. If above, you may owe more on your return.

Ways to reduce bonus withholding

  • Direct part of the bonus into 401(k) or HSA via payroll, reducing taxable wages.
  • Set Step 4(b) deductions on the W-4 if you itemize.
  • Adjust Step 4(c) extra withholding negative is not allowed, but you can submit a new W-4 to lower future regular-wage withholding to compensate.

The myth in one sentence

Bonuses are not taxed at a higher rate. They are withheld at a flat rate that often over-collects, and the over-collection comes back at filing.

Frequently asked questions

Is 22 percent the actual tax rate on bonuses?
No. It is the federal withholding rate. Your actual tax depends on your total annual income. Over-withholding refunds at filing time.
What if my bonus is over $1 million?
Amounts above $1 million in a calendar year are withheld at 37 percent under the percentage method.
Can I ask payroll to withhold less?
Hard. The percentage method is fixed at 22 percent. You can lower regular-wage withholding via your W-4 to offset, or direct bonus dollars into 401(k) or HSA.
Does FICA apply to bonuses?
Yes. 6.2 percent Social Security up to the wage base and 1.45 percent Medicare on every dollar. Plus 0.9 percent Additional Medicare above thresholds.

Related