What is the federal withholding rate on bonuses?

The IRS supplemental wage withholding rate is 22% on bonuses up to $1 million in a calendar year. For bonus amounts over $1 million, the rate on the excess is 37%. These are withholding rates — your actual tax is calculated on your full year's income when you file. A 22% withholding does not mean you owe 22%; it means that's how much your employer sends to the IRS on your behalf.

How is bonus withholding different from regular paycheck withholding?

Regular paycheck withholding uses the IRS wage bracket method, which estimates your full annual income from one paycheck and withholds proportionally. Bonus withholding uses the flat supplemental rate (22%) applied directly to the bonus amount. The aggregate method (less common) combines your bonus and salary for that pay period and calculates combined withholding.

Do bonuses get withheld for Social Security and Medicare?

Yes. Bonuses are subject to FICA taxes: Social Security at 6.2% (up to the $176,100 wage base in 2026) and Medicare at 1.45% (no cap, plus 0.9% Additional Medicare Tax above $200,000 for single filers). FICA is often why bonuses feel more heavily taxed than salary — it's applied on top of income tax withholding.

Can I change my withholding to get more of my bonus now?

You can submit a new W-4 to reduce withholding, but this changes your regular paycheck withholding too. A better approach: claim extra allowances or adjust your W-4 temporarily, then change it back after the bonus is paid. However, be careful — under-withholding on a large bonus could result in an underpayment penalty if you owe more than $1,000 at filing.

Bonus Tax Withholding: How Much Is Taken Out and Why

Two Methods Employers Use to Withhold Bonus Taxes

Method 1: Flat Supplemental Withholding Rate

Most employers use this method. The IRS allows employers to withhold at a flat 22% on supplemental wages (including bonuses, commissions, overtime, and awards) separately from regular wages.

Federal withholding rate:

Bonuses ≤ $1 million in a year: 22% flat
Bonus amount above $1 million: 37% flat

This is the simpler, more common method and gives you a predictable calculation.

Method 2: Aggregate Method

Some employers add the bonus to your most recent paycheck and calculate withholding on the combined total using IRS wage bracket rates, then subtract what was already withheld on the paycheck.

Example: $5,000 biweekly salary + $15,000 bonus = $20,000 for that pay period. The employer calculates withholding as if you earn $20,000 biweekly (roughly $520,000/year), resulting in a higher withholding rate.

The aggregate method often results in more withholding than the flat 22% method, particularly for mid-income earners who don’t normally land in higher brackets.

Complete Withholding Breakdown by Bonus Size

Federal + FICA + State (Estimated)

Bonus	Federal (22%)	SS (6.2%)	Medicare (1.45%)	State (5% avg)	Net Payout
$1,000	$220	$62	$14.50	$50	$653.50
$2,500	$550	$155	$36.25	$125	$1,633.75
$5,000	$1,100	$310	$72.50	$250	$3,267.50
$10,000	$2,200	$620	$145	$500	$6,535
$20,000	$4,400	$1,240	$290	$1,000	$13,070
$50,000	$11,000	$3,100	$725	$2,500	$32,675
$100,000	$22,000	$3,100*	$1,450	$5,000	$68,450

Social Security caps at $176,100 in 2026 wages. If you’ve already earned $176,100 in salary before the bonus, no more SS is withheld on the bonus.

State rates vary: 0% (TX, FL, WA, NV), ~3% (NC, UT), ~5% (CO, VA), ~9-13% (CA, NY, NJ, OR)

FICA: The Hidden Extra Withholding

Federal income tax withholding is straightforward — the confusion usually comes from FICA taxes being added on top.

Tax	Rate	2026 Wage Limit
Social Security	6.2%	$176,100
Medicare	1.45%	No limit
Additional Medicare	0.9%	$200,000+ (single)

On a $10,000 bonus, FICA withholding alone is $765 — before any income tax. Many employees see the total withholding and attribute it all to “income tax,” when FICA is a significant chunk.

State Tax Withholding on Bonuses

States handle bonus withholding differently:

State Approach	States	Rate
No income tax	TX, FL, WA, NV, SD, WY, AK, TN	0%
Flat supplemental rate	CA (10.23%), NY (11.7%), NJ, CO, OR	Varies
Aggregate method	Most remaining states	Varies
Flat wage rate	Several Midwestern states	Varies

California is notable: the CA flat bonus withholding rate is 10.23% + federal 22% + FICA. A $10,000 bonus in California sees combined federal + state withholding of ~$3,223 before FICA, or roughly 40-42% total withholding.

What Happens at Tax Filing

Withholding is a prepayment toward your annual tax bill. When you file your return:

Total income (salary + bonus + other) = taxable income
Tax owed on total income is calculated using progressive brackets
Withholding paid throughout the year is credited
You either owe more or receive a refund

If too much was withheld on your bonus: You receive a refund. If too little was withheld (aggregate method with high income): You may owe additional tax.

How to Calculate Your Estimated Net Bonus

Use this formula to estimate your net payout before receiving it:

$$\text{Net Bonus} = \text{Gross Bonus} \times (1 - 0.22 - 0.062 - 0.0145 - \text{State Rate})$$

For a 5% state rate: $$\text{Net} = \text{Gross} \times (1 - 0.3965) = \text{Gross} \times 0.6035$$

So a $15,000 bonus × 0.6035 = ~$9,053 net

This formula assumes you haven’t hit the SS wage base cap. If your YTD wages already exceed $176,100, remove the 6.2% SS component:

$$\text{Net} = \text{Gross} \times (1 - 0.22 - 0.0145 - \text{State Rate})$$

Can You Adjust Withholding Before a Bonus?

Changing your W-4: You can file a new W-4 with your employer to reduce federal withholding. Adding allowances or claiming exemption (if legitimate) lowers what’s withheld. However, you must have withheld at least 90% of what you owe or 100% of last year’s tax liability to avoid underpayment penalties.

Practical approach: If you know your bonus is coming and want more cash now at the cost of a smaller refund (or a small payment due), talk to payroll about changing your W-4 for that pay period only, then revert it.

Caution: Federal and state income taxes can be adjusted. FICA cannot — it’s mandatory regardless of W-4 elections.