Bonus Tax Calculator

The IRS treats bonuses, commissions, overtime paid separately and severance as supplemental wages. They aren't taxed at a special rate on your tax return, but IRS Publication 15 gives employers two ways to withhold federal income tax from them when they're paid.

The percentage (flat) method. If the bonus is paid separately from your regular wages, or clearly identified on the same check, your employer can withhold a flat 22%. That rate has been fixed since 2018 and applies in 2026. Once your supplemental wages for the year pass $1 million, the rule changes: every dollar above $1 million must be withheld at 37%, the top income tax rate, no matter which method your employer otherwise uses.

The aggregate method. Your employer adds the bonus to your regular pay for that period and withholds as if the combined amount were a normal paycheck, then subtracts what it already withholds from your regular wages. Because payroll software annualizes that one large paycheck, it often lands in a higher bracket and withholds more than 22%, which is why a bonus paid this way can feel "taxed at 40%".

FICA always applies. Social Security takes 6.2% until your wages for the year reach the 2026 wage base of $184,500, and Medicare takes 1.45% on every dollar, plus an extra 0.9% once your wages pass $200,000. States add their own withholding: some publish a flat supplemental rate, such as California's 10.23% on bonuses, while states without an income tax withhold nothing.

Withholding isn't your final tax. When you file, your bonus is simply added to your other income. If too much was withheld, you get it back as a refund; if too little, you owe the difference. Contributing part of a bonus to a traditional 401(k), where your plan allows it, is one of the few ways to lower the tax itself.