Why Is My Bonus Taxed So High? Withholding vs the Tax You Actually Owe

You get a $10,000 bonus and the deposit is several thousand dollars short. It looks like bonuses are taxed at a punishing rate, but they aren't. What you're seeing is withholding, an estimate taken on payday, not your final tax. This article explains how bonus withholding works in 2026 and how to tell whether you'll get money back. Figures come from our bonus tax calculator.

Short answer

Bonuses are taxed at the same rates as salary when you file. They feel taxed more because employers withhold federal income tax either at a flat 22% or with the aggregate method, which treats the bonus as if you earned it every pay period and can withhold far more. Social Security (6.2%) and Medicare (1.45%) come out too, plus any state tax. If more federal tax was withheld than you owe, you get the difference back as a refund.

Flat 22% vs the aggregate method

IRS rules give employers two ways to withhold federal tax from a bonus. For a single filer in Texas earning $85,000 a year, paid every two weeks, with a $10,000 bonus:

Texas has no state income tax, so this shows the federal effect alone. Supplemental pay above $1 million in a year is always withheld at 37%.

Why the aggregate method looks worse

The aggregate method adds the bonus to a regular paycheck and works out withholding as if that combined amount were paid every period. A $3,269 paycheck plus a $10,000 bonus is treated like a salary of about $345,000 a year, so much of the bonus is withheld at 24% to 35% instead of the 22% bracket the person is actually in.

How often you're paid matters. With monthly pay instead of every two weeks, the same bonus is annualized over 12 periods, not 26, and aggregate withholding drops to $2,338.67.

Withholding vs the tax you actually owe

When you file, your bonus is added to your salary and taxed at your normal brackets. Whether you get money back depends on your top bracket, not on the 22%:

Single filer, 2026 federal brackets and standard deduction, no other income or deductions. With the aggregate method, more is withheld in each case, so the refund is larger or the amount owed is smaller.

Social Security and Medicare are real costs

Unlike income tax withholding, the 7.65% for Social Security and Medicare is the actual tax, not an estimate, and doesn't come back at filing. Social Security stops once your wages for the year pass $184,500, and an extra 0.9% Medicare applies above $200,000.

How to estimate your real tax on a bonus

1. Find your top federal bracket. Subtract the standard deduction ($16,100 for a single filer in 2026) from your salary plus bonus.
2. Multiply the bonus by that bracket rate, or by two rates if the bonus crosses into the next bracket.
3. Add 7.65% for Social Security and Medicare, and your state's tax if any.
4. Compare with your pay stub. If the withholding is higher, expect a refund; if lower, set money aside.

The paycheck calculator shows your full-year tax with and without the bonus if you enter the two salary figures.

Ways to keep more of your bonus

• Contribute to your 401(k) if your plan allows deferrals from bonuses. Pre-tax contributions cut federal (and most state) income tax now. See how a 401(k) affects your paycheck.
• Adjust your W-4 if bonuses regularly leave you with big refunds or bills.
• Ask about timing. A bonus paid in early January counts in the next tax year.
• Check your state. States have their own bonus withholding; California, for example, withholds 10.23% and New York 11.70%. See California bonus tax rate 2026 and New York bonus tax rate 2026.

Sources

• IRS Publication 15: supplemental wages
• IRS: federal income tax rates and brackets