Two withholding methods
Flat (percentage) method: if the bonus is paid separately or identified separately from regular wages, the employer can withhold a flat22% federal income tax. Above $1 million of supplemental wages in a year, 37% is mandatory on the excess.
Aggregate method: the bonus is added to a regular paycheck and withholding is figured on the total, as if you earned that amount every period. Your W-4 applies, but annualizing a bonus-sized check often withholds more on large bonuses.
Withheld vs owed on a $5,000 bonus
Single filer, paid every two weeks, Texas (federal only). “Actually owed” is the extra federal income tax the bonus adds to your 2026 return.
| Salary | Flat 22% withheld | Aggregate withheld | Actually owed | Bonus take-home (flat) |
|---|---|---|---|---|
| $45,000 | $1,100.00 | $1,058.23 | $600.00 | $3,517.50 |
| $85,000 | $1,100.00 | $1,171.69 | $1,100.00 | $3,517.50 |
| $160,000 | $1,100.00 | $1,442.31 | $1,200.00 | $3,517.50 |
At lower salaries the 22% flat rate withholds more than the bonus costs you, and the difference comes back as a refund. At higher salaries, 22% can be too little.
Social Security, Medicare and state tax
FICA applies in full: 7.65% until your wages pass $184,500. Many states have their own flat bonus rate (California 10.23%, New York 11.7%, for example); others add the bonus to regular wages. The bonus tax calculator lists every state’s rule.
Ways to keep more of a bonus
- Ask whether a bonus can go into your 401(k); deferrals reduce federal and most state income tax on it.
- If your employer uses the aggregate method, a larger Step 4(b) on your W-4 lowers the withholding.
- If the bonus pushes you over-withheld for the year, you can lower Step 4(c) extra withholding for the remaining checks.
Frequently asked questions
Why is 22% taken from my bonus when my bracket is 12%?
The flat 22% supplemental rate is a withholding shortcut set by the IRS, not your tax rate. If your top bracket is lower, the extra withheld is credited on your return.
Can I ask my employer to withhold less on a bonus?
Not below 22% under the flat method; that rate ignores your W-4. If your employer uses the aggregate method, your W-4 does apply, so Step 4(b) deductions reduce it.
Are bonuses subject to Social Security and Medicare?
Yes. 6.2% Social Security (until you reach $184,500 of wages for the year) and 1.45% Medicare apply to every bonus dollar.
