How it's calculated
A bonus is a "supplemental wage" payment, and federal income tax on it is withheld under the rules in section 7 of IRS Publication 15.IRS Your employer picks one of two methods:
- Flat rate: a fixed percentage of the bonus, whatever filing status and dependents are on your W-4.
- Aggregate: the bonus is added to a regular paycheck, withholding is figured on the total as if it were a normal paycheck, and the withholding on the regular paycheck alone is subtracted.
On top of either method, any part of your supplemental wages for the year above a high threshold is withheld at a mandatory top rate. Then Social Security and Medicare are withheld on the bonus, and your state's supplemental withholding method is applied.
The formula
- Mandatory portion = the part of this bonus that, together with bonuses already paid this year, exceeds $1,000,000. Withheld at 37%.
- Rest of the bonus, by method:
- flat: rest × 22%;
- aggregate: withholding on (regular paycheck + rest of bonus) − withholding on the regular paycheck alone, both figured with the Publication 15-T (2026) percentage method for your filing status and Step 2 box. Regular paycheck = salary ÷ paydays.
- Social Security = 6.2% × the part of the bonus that falls under the $184,500 wage base, after wages already paid this year.
- Medicare = 1.45% × bonus, plus 0.9% × the part of the bonus that takes your wages for the year above $200,000.
- State withholding = your state's supplemental method: a flat rate, an aggregate calculation, or nothing in states without a wage tax.
- Bonus after withholding = bonus − federal − Social Security − Medicare − state.
Worked example
A $5,000 bonus for a single filer in Illinois earning $75,000 a year, paid biweekly, with federal tax withheld at the flat rate:
| Line | Amount |
|---|---|
| Bonus | $5,000 |
| Federal (22% flat rate) | -$1,100 |
| Social Security | -$310 |
| Medicare | -$72 |
| Illinois (4.95% flat rate) | -$247 |
| Bonus after withholding | $3,270 |
The employee receives $3,270, with 34.6% of the bonus withheld in total. Under the aggregate method the same bonus would leave $3,206.
Assumptions and limitations
- Your employer chooses the method. Ask payroll which one it uses. If your employer simply adds the bonus to a regular paycheck without listing it separately, the aggregate method applies.
- Aggregate method details. We add the bonus to one regular paycheck for the current pay period, which Publication 15 permits. The calculation uses your filing status and Step 2 box; other W-4 entries (Step 3 credits and Step 4 adjustments) are not collected here, so if you have them, the real aggregate withholding may be somewhat lower or higher.
- Wages and bonuses already paid this year default to zero. Enter them under the advanced options if you are near the Social Security wage base, the Additional Medicare threshold or the supplemental threshold.
- One employer. Supplemental wages from businesses under common control count together for the mandatory rate, which we cannot see.
- State income tax only. State payroll taxes (such as disability or paid leave premiums) and local income taxes on the bonus are not included.
- Withholding, not your final tax. Your bonus is taxed at your marginal rate on your return, and over- or under-withholding is settled when you file. Our guide to why bonuses seem taxed so heavily shows how to estimate the difference, and the federal income tax calculator can estimate your full-year tax.