Bonus Tax Withholding: The 22% Supplemental Rate and What You Actually Keep
October 29, 2026
Bonuses often feel as though they are taxed at a higher rate than regular pay, but the bonus is taxed the same as other income when you file your return. The difference lies in withholding, the amount your employer sends to the government in advance. In the US, employers can withhold on supplemental wages with a flat 22% federal rate (for supplemental wages up to $1 million in a year), or use the aggregate method, adding the bonus to a regular paycheck.
Payroll taxes apply as usual: Social Security at 6.2% (up to the annual wage base) and Medicare at 1.45%, together 7.65%. State and local taxes may add more.
Skip the math and get your answer instantly:
Open the Tax Calculator →Worked Example: $10,000 Bonus
Federal withholding at 22%: $2,200. Social Security: $620. Medicare: $145. Subtotal: $2,965. A state income tax of 5% adds $500, for $3,465 withheld and a net of $6,535 (65%). Without state tax, the net would be $7,035.
If your actual marginal federal bracket is 24%, the real tax on the bonus is $2,400 rather than $2,200, so you will owe an extra $200 at filing; if your marginal bracket is 12%, the real tax is $1,200 and you will receive a $1,000 refund difference. The withholding is a prepayment, not the final tax.
| Item | Rate | Amount on $10,000 |
|---|---|---|
| Federal withholding | 22% | $2,200 |
| Social Security | 6.2% | $620 |
| Medicare | 1.45% | $145 |
| State tax (example) | 5% | $500 |
| Total withheld | 34.65% | $3,465 |
| Net bonus | $6,535 |
Effect of 401(k) Contributions
If you elect to defer 10% of the bonus into a traditional 401(k), $1,000 goes to the account and is not subject to federal income tax withholding (but is still subject to payroll tax). Federal withholding becomes 22% × $9,000 = $1,980. Take-home before state tax: $10,000 − $1,000 − $1,980 − $765 = $6,255, with $1,000 saved for retirement. Check your plan settings, because bonus deferral elections are sometimes separate from regular paycheck elections.
Why It Feels Heavier
The flat supplemental method ignores your actual bracket and withholds as if the bonus were the top slice of income, and the aggregate method can temporarily push withholding higher because the paycheck is annualized as if the bonus were earned every pay period. Neither changes your final tax liability. The marginal tax rate is the rate on the last dollar of income, so extra income from a bonus is taxed at your highest bracket, but your lower income is still taxed at lower rates. A bonus will not make you take home less overall.
Planning Tips
Estimate the tax effect of a bonus before you spend it by multiplying by your marginal rate plus payroll tax plus state. If you are likely to owe, adjust your W-4 withholding or make an estimated payment. Big bonuses can push you above Social Security wage base or into a higher bracket for part of the amount. Consider directing part of the bonus to a 401(k), HSA, or other tax-advantaged account. This article is general information, not tax advice; consult a tax professional for your situation.
Frequently Asked Questions
Are bonuses taxed at a higher rate?
No. Withholding may be higher, but the final tax is based on your total income.
What is the federal supplemental withholding rate?
22% for supplemental wages up to $1 million.
Do payroll taxes apply to bonuses?
Yes, Social Security and Medicare apply at 7.65% up to the limits.
Can I reduce withholding on a bonus?
By deferring part into a 401(k), for example.
Will I get money back at tax time?
If more was withheld than your actual tax, yes.