Bonuses are taxed as ordinary income, the same as your salary. What makes them feel different is withholding: employers often take out federal income tax at a flat 22% bonus tax rate, plus Social Security, Medicare and any state tax, which is why a bonus check can look much smaller than expected.
The 22% is a withholding rate, not your final tax. When you file your return, the bonus is added to your other wages and taxed at your regular brackets. Depending on your income, the flat 22% can turn out to be too much, about right, or too little.
Bonuses Are Supplemental Wages
The IRS calls bonuses, commissions, severance and similar payments supplemental wages. Employers can withhold federal income tax on them in one of two ways, described in IRS Publication 15.
The percentage (flat rate) method
If the bonus is paid separately from your regular pay, or listed separately on the same check, your employer can withhold a flat 22% for federal income tax. Your W-4 entries don't change this rate.
The aggregate method
Your employer adds the bonus to your regular wages for the period and withholds as if the total were your normal paycheck. Because a large one-time paycheck looks like a much higher annual salary to the withholding tables, this can withhold more than 22% on the bonus portion.
Bonuses over $1 million
Once your supplemental wages for the year exceed $1 million, the portion above $1 million must be withheld at 37%, whatever method is used for the rest.
What Comes Out of a Bonus Check
| Tax | Rate on the bonus |
|---|---|
| Federal income tax | 22% flat (37% over $1 million), or the aggregate method |
| Social Security | 6.2%, until your year-to-date wages reach $184,500 |
| Medicare | 1.45%, plus 0.9% on wages over $200,000 for the year |
| State income tax | Depends on the state; some use a flat supplemental rate |
States set their own rules for withholding on bonuses, so check with your state revenue department or your employer's payroll team. States with no wage tax, such as Texas and Florida, take nothing. Your bonus may also be eligible for 401(k) deferrals, depending on your plan, which would lower the federal income tax taken out.
Worked Example: A $4,000 Bonus in North Carolina
Say you earn $65,000 a year in North Carolina, file single, are paid biweekly, and get a $4,000 bonus.
Flat 22% method
- Federal income tax (22%): $880
- Social Security (6.2%): $248
- Medicare (1.45%): $58
- Plus North Carolina withholding, set by the state's rules
Aggregate method
If the bonus is added to a regular $2,500 paycheck, the combined $6,500 check is treated like a $169,000 salary for that period. Using the PaycheckHubs paycheck calculator, federal withholding on a $6,500 biweekly paycheck is $1,126.69, compared with $216.15 on the regular $2,500 check. That puts about $910.54 of federal withholding on the bonus, slightly more than the flat method.
What you actually owe on it
Your real tax is the difference between the federal tax on $69,000 and on $65,000 of wages. The calculator puts federal tax at about $5,620 on $65,000 and $6,350 on $69,000, so the bonus adds about $730 of federal income tax. Part of the bonus falls in the 12% bracket and part in the 22% bracket.
Under the flat method, $880 was withheld, so about $150 more than needed comes back when you file, assuming everything else is unchanged.
Worked Example: A $2,000 Bonus in Idaho
Now take a single worker in Idaho earning $38,000, paid biweekly, with a $2,000 bonus.
| Item | Amount |
|---|---|
| Federal withheld at 22% | $440 |
| Federal tax on $38,000 of wages | $2,380 |
| Federal tax on $40,000 of wages | $2,620 |
| Actual federal tax on the bonus | $240 (12% bracket) |
| Over-withheld | About $200 |
For workers in the 10% or 12% bracket, the flat 22% rate withholds more than the bonus will cost, and the extra comes back as part of a refund. For people in the 24% bracket or higher, 22% falls short, and the difference is owed at filing. Social Security and Medicare ($153 combined on this bonus) are final and don't change at tax time.
Why Bonuses Feel Overtaxed
A few things combine:
- The flat 22% is higher than the real rate for many workers, as the Idaho example shows.
- FICA, at 7.65% for most workers, comes off the top.
- State withholding is added on top.
- Under the aggregate method, a big paycheck is withheld as if you earned that much every period.
The tax you owe on a bonus is no different from the tax on the same amount of salary. Read supplemental wages for more on how employers handle these payments, and marginal vs effective tax rate to see why your bracket matters.
Ways to Keep More of a Bonus
- Increase your 401(k) contribution for the bonus, if your plan applies deferrals to bonuses. Traditional deferrals lower federal income tax, though not Social Security or Medicare. The 2026 deferral limit is $24,500.
- Fund an HSA through payroll if you're eligible; the 2026 limits are $4,400 self-only and $8,750 family.
- Adjust your W-4 if a large bonus will leave you under-withheld. A higher earner might add extra withholding in Step 4(c) for the rest of the year. See how to fill out a W-4, step by step.
For a personal decision about timing or contributions, check IRS guidance or a tax professional.
Frequently Asked Questions
What is the federal bonus tax rate in 2026?
Employers using the flat method withhold 22% federal income tax on bonuses, and 37% on supplemental wages over $1 million in a year. Your actual tax depends on your bracket when you file.
Are bonuses taxed more than regular pay?
No. Bonuses are taxed as ordinary income at the same rates as salary. Only the withholding method is different.
Will I get bonus withholding back?
If your top bracket is 10% or 12%, the flat 22% likely withheld more than you owe, and the extra is part of your refund. If your bracket is 24% or higher, you may owe more.
Do bonuses count toward the Social Security wage base?
Yes. Bonuses are wages, so they count toward the $184,500 limit for 2026 and are subject to Medicare tax with no cap.
Sources
- IRS Publication 15, Employer's Tax Guide
- IRS Publication 505, Tax Withholding and Estimated Tax
- IRS Topic No. 751, Social Security and Medicare Withholding Rates
- IRS: 401(k) limit increases to $24,500 for 2026
Run the numbers for your state
Written and checked against IRS, Social Security Administration and state tax agency publications for the 2026 tax year. General information, not tax, legal or financial advice. Read our editorial policy, calculation methodology and sources.