Bonus Tax (2026): How Bonuses Are Withheld and Taxed

Are bonuses taxed at a higher rate? No. A bonus is taxed as ordinary income at your usual brackets. It looks higher because employers often withhold a flat 22% federal rate on it (37% above $1 million in a year), plus Social Security and Medicare. Your actual tax is settled when you file, so over-withholding comes back as a refund.

What counts as a bonus?

The IRS calls bonuses, commissions, back pay, severance and similar payments supplemental wages. They are taxable income like regular pay, but employers use special withholding methods for them.

Two ways employers withhold on bonuses

Percentage (flat-rate) method: when the bonus is paid separately from regular wages, the employer may withhold a flat 22% federal income tax.
Aggregate method: the employer adds the bonus to your regular wages for the period, calculates withholding on the total as if it were a normal paycheck, then subtracts the tax already withheld on the regular wages. This can withhold more for a single period.

The 22% flat rate

The optional flat rate on supplemental wages stays at 22% for 2026 because the tax rates from the 2017 law were made permanent. This is a withholding rate, not your final tax rate — if your actual bracket is lower, the extra is refunded when you file; if it is higher (24% or above), you may owe more.

Bonuses over $1 million

Employers must withhold at the top rate of 37% on the portion of an employee's supplemental wages that exceeds $1 million in a calendar year. The flat 22% rate cannot be used for that portion.

Social Security and Medicare on bonuses

FICA applies to bonuses: Social Security 6.2% (until your year-to-date wages reach the $184,500 wage base) and Medicare 1.45%, plus 0.9% Additional Medicare on wages over $200,000.

State tax on bonuses

State withholding on bonuses varies: some states use a flat supplemental rate, others use the regular tables. Our calculator shows the regular estimate for each state on the state pages; check your state's revenue agency for the exact supplemental rate.

Worked example: a $5,000 bonus

Line	Amount
Bonus	$5,000.00
Federal income tax (22% flat)	−$1,100.00
Social Security (6.2%)	−$310.00
Medicare (1.45%)	−$72.50
Net before state tax	$3,517.50
State tax, illustrative 5%	−$250.00
Net bonus	$3,267.50

Your bonus is not "lost" to tax: a $5,000 bonus withheld this way still nets roughly 65% of its face value in this example, and the final tax is settled on your return.

Myth: a bonus can push you into a higher bracket and cost you money

Because federal brackets are marginal, only the income above each threshold is taxed at the higher rate. A bonus can never reduce your total after-tax income compared with not receiving it. See the full 2026 federal brackets and the paycheck tax overview.

Frequently asked questions

How much tax is withheld from a bonus?

Most employers withhold a flat 22% federal income tax on bonuses (37% on the part of supplemental wages over $1 million in a year), plus Social Security 6.2%, Medicare 1.45% and any state tax.

Is a bonus taxed more than regular pay?

The withholding rate can be higher than your usual rate, but your actual tax is figured on your total income at filing. Any over-withholding is refunded.

Can my employer add my bonus to my regular paycheck?

Yes. Under the aggregate method the bonus is combined with regular wages and withheld as if the total were regular pay, which often withholds more.