How bonuses are actually taxed
A bonus is ordinary taxable income. There is no special "bonus tax rate." What confuses people is the withholding: bonuses are "supplemental wages," and employers usually withhold federal income tax at a flat 22% (37% on the part above $1 million) instead of using your normal W-4 tables. On top of that come Social Security (6.2% up to the wage base), Medicare (1.45%), and any state tax.
Withholding is not your final tax
This is the key thing to understand. That flat 22% is an estimate the IRS lets employers use for convenience. It is not what you ultimately owe. When you file:
- If your real marginal rate is lower than 22% (say you're in the 12% bracket), too much was withheld and you get the difference back as a refund.
- If your real rate is higher (24%, 32%, 35%, 37%), not enough was withheld and you may owe the difference at filing.
The Social Security wage-base wrinkle
Social Security tax (6.2%) only applies to earnings up to the annual wage base: $184,500 in 2026. If your salary has already passed that, your bonus escapes the 6.2% entirely, which is why this calculator asks for your regular salary. Medicare's 1.45% has no cap and always applies, plus an extra 0.9% on wages above $200,000 (single) or $250,000 (joint).
The aggregate method
Some employers use the alternative "aggregate" method: they add the bonus to a regular paycheck, withhold on the total as if you earned that much every pay period, and then subtract what your paycheck alone would have had withheld. Because the payroll system briefly treats you as a much higher earner, a large bonus can be withheld at well over 22%, and the paycheck it arrives in can look brutally taxed. Pick Aggregate in the calculator to see it. Take a single filer paid $60,000 a year every two weeks who receives a $5,000 bonus with a regular paycheck: the flat-rate method withholds $1,100 of federal tax, the aggregate method about $1,127. Either way, the year-end math is the same. Only the timing of the withholding differs. The aggregate method is not allowed on supplemental wages over $1 million for the year, where the 37% rate is mandatory.
Commissions, severance and other supplemental pay
The same rules cover more than bonuses. IRS Publication 15 lists commissions, overtime pay, severance pay, back pay, awards and prizes among supplemental wages, so a commission check or a severance payment is withheld exactly like a bonus: 22% federal on the flat-rate method (or the aggregate method if your employer pays it with regular wages), plus Social Security and Medicare. Enter the payment as the bonus amount to see what you keep. Severance is still wages for Social Security and Medicare, and, like a bonus, it is taxed at your ordinary rates when you file. (Source: IRS Publication 15 (2026), section 7, Supplemental Wages.)
Ways to keep more of it
You can't change the tax rate on a bonus, but you can change your taxable income. Directing part of a bonus into a traditional 401(k) or an HSA reduces the income tax on it (401(k) contributions still pay FICA). If your employer allows it, deferring a bonus into January can also help when you expect a lower-income year. Run the numbers first with the paycheck calculator to see how the change lands.