You were promised a bonus, the deposit arrived, and a big piece of it was missing. That is normal, and it is usually not because bonuses are taxed at a special high rate. It is because of how withholding on bonuses works: your employer takes out federal income tax using a shortcut rate or formula, then Social Security, Medicare and state tax on top.
The withholding is an estimate. Your bonus is taxed on your return like the rest of your pay, and if too much was withheld, you get it back. This guide explains the federal rules for 2026, shows a worked example, and walks through how to tell whether you will get a refund or owe more.
To run your own numbers, use the bonus tax calculator.
The short answer
For 2026, most bonuses paid as a separate payment have federal income tax withheld at a flat 22%. Then Social Security (6.2%) and Medicare (1.45%) come out, plus your state’s withholding if it taxes wages. Added up, that often feels like a third of the bonus disappearing.
But the flat rate is just a withholding rule. When you file your return, the bonus is added to your other income and taxed at your normal rates. If your top bracket is lower than the flat rate, too much was withheld and the extra comes back as part of your refund. If your top bracket is higher, you may owe a bit more.
How federal withholding on a bonus works
The IRS calls bonuses, commissions, severance, back pay, awards and similar payments “supplemental wages.” Section 7 of IRS Publication 15 sets the withholding rules.IRS Your employer, not you, chooses the method.
The flat-rate method
If the bonus is paid separately from your regular pay (or paid together but shown as a separate amount), and your employer withheld income tax from your regular wages this year or last year, it can simply withhold 22% of the bonus. Publication 15 says no other percentage is allowed for this method. The rate does not change with the filing status or dependents on your W-4.
This is the most common method for bonuses paid in their own check, because it is simple and predictable.
The aggregate method
The alternative is to treat the bonus as part of a regular paycheck. Payroll adds the bonus to your regular wages for the period, figures withholding on the total as if it were a normal paycheck, subtracts the withholding on your regular wages alone, and takes the difference out of the bonus.
The catch is that the regular withholding formula annualizes each paycheck. A biweekly paycheck that includes a $10,000 bonus is treated as if you earned that much every two weeks all year. That pushes the combined check into a higher bracket in the withholding tables, so the aggregate method often withholds more than the flat rate, sometimes much more. It is also the method that applies if your employer simply adds the bonus to your regular pay without identifying it separately.
Very large bonuses: the mandatory top rate
Once your supplemental wages from one employer pass $1,000,000 in a calendar year, the excess must be withheld at 37%, the top income tax rate, regardless of your W-4. Payments from businesses under common control count together.
Both supplemental rates stayed the same for 2026 because P.L. 119-21 made the current individual tax rates permanent, according to the What’s New section of Publication 15.
Social Security and Medicare take their share too
Whichever method your employer uses for income tax, a bonus is wages for Social Security and Medicare, so both are withheld in full. Two exceptions affect high earners:
- Social Security stops at the wage base. If your wages for the year have already reached $184,500, no Social Security tax comes out of the bonus. If the bonus pushes you past it, only the part below the wage base is taxed.
- Additional Medicare Tax. Once your wages from an employer pass $200,000 in the year, an extra 0.9% is withheld on the excess.
The bonus calculator’s advanced fields let you enter wages and bonuses already paid this year so it can apply both rules.
State withholding on bonuses
States set their own rules. Some have a flat supplemental withholding rate for bonuses, some use an aggregate method like the federal one, and the states without an income tax withhold nothing. Your state’s paycheck page lists its supplemental method and source. Start from the state table in our paycheck tax guide to find yours.
A worked example: a $10,000 bonus
Here is a $10,000 bonus for a single filer in Texas earning $85,000 a year, paid every two weeks, with federal tax withheld at the flat rate:
| Line | Amount |
|---|---|
| Bonus | $10,000 |
| Federal (22% flat rate) | -$2,200 |
| Social Security | -$620 |
| Medicare | -$145 |
| Texas (no state withholding) | $0 |
| Bonus after withholding | $7,035 |
With the flat-rate method, the employee receives $7,035. If the employer used the aggregate method instead, total withholding would be $3,612 and the employee would receive $6,388. Same bonus, same person, different withholding.
In a state with an income tax, add the state line on top. The calculator handles every state.
Withholding vs what you actually owe
Here is the part that matters most: the bonus is not taxed at the withholding rate. On your return, it is just more wages. It gets taxed at your marginal rate, the rate of the bracket the extra income lands in. Whether withholding was too high or too low depends on that bracket.
When the flat rate withholds too much. Someone earning $40,000 a year as a single filer has their top dollars in the 12% bracket. On a $5,000 bonus, the flat method withholds $1,100 in federal income tax. Yet their full-year federal tax only rises from $2,620 to $3,220 with the bonus. The difference between what was withheld and the actual extra tax comes back at filing time.
When the flat rate is about right. At $85,000, a single filer’s top bracket is 22%, the same as the flat rate. Federal tax on $85,000 is $9,870 and on $95,000 it is $12,070, so the extra tax on the $10,000 bonus matches the flat-rate withholding closely.
When the flat rate withholds too little. A single filer earning $250,000 is in the 32% bracket or higher. Every bonus dollar is taxed at that rate on the return, but only 22% was withheld. Expect a smaller refund or a balance due, unless you add extra withholding through Step 4(c) of your W-4.
Social Security and Medicare are different: what is withheld is generally what is owed. The exceptions are excess Social Security withheld by two or more employers, which you claim back as a credit on your return, and the Additional Medicare Tax, which is settled on Form 8959 using thresholds that depend on filing status.
Reconciling at tax time
You do not report the bonus separately. It is included in the wages in box 1 of your W-2, and all the federal income tax withheld from it is included in box 2, together with your regular pay. When you file your 2026 return:
- Your total wages, including the bonus, go on Form 1040 with your other income.
- Your tax is figured on the total, using the 2026 brackets and your deductions.
- Everything withheld during the year, from paychecks and bonuses alike, is subtracted.
- A positive balance is a refund; a negative one is tax due.
The federal income tax calculator does this for you: enter your wages including the bonus and your total withholding to see a refund or balance-due estimate.
Can you reduce the tax on a bonus?
There is no way around Social Security and Medicare on a cash bonus, but some choices change the income tax:
- 401(k) contributions. If your plan lets you defer part of a bonus into a traditional 401(k), that part is not subject to federal income tax withholding (but still subject to Social Security and Medicare). The 2026 employee deferral limit is $24,500 across all your pay.
- HSA contributions through a cafeteria plan avoid income tax and FICA, if you are eligible and have room under the annual limit.
- Fix under-withholding early. If you are in a high bracket and expect a large bonus, adding a per-paycheck amount in W-4 Step 4(c) avoids a surprise in April. Our W-4 guide explains how.
Asking your employer to switch methods changes only how much is withheld now, not how much tax you owe.
Frequently asked questions
Are bonuses taxed at a higher rate than salary?
No. A bonus is ordinary wage income, taxed at the same rates as your salary on your return. Only the withholding method is different, and it can take out more or less than you will finally owe.
Why was almost half of my bonus withheld?
Usually because your employer used the aggregate method, which treats the bonus as if you earned it every pay period, or because state and local taxes are added on top. The excess comes back when you file if your real tax is lower.
Will a bonus push me into a higher tax bracket?
Only the part of your income above a bracket threshold is taxed at the higher rate. Crossing a threshold never reduces your take-home pay. See the 2026 brackets in our guide to paycheck taxes.
Is a bonus paid in December taxed differently from one in January?
The rules are the same, but the tax year is different. A bonus paid in December 2026 counts toward your 2026 income and wage base; one paid in January 2027 counts toward 2027. That can matter if you are near a bracket edge or the Social Security wage base.