# Bonus tax rate in 2026: why 22% is withheld and what you actually owe

Source: https://taxbracketsdesk.com/payroll-tax/bonus-tax-rate
Publisher: Tax Brackets Desk (taxbracketsdesk.com), independent editorial site
Topic: Payroll and Self-Employment Tax
Last updated: 2026-09-19

> The federal bonus tax rate for 2026 is a flat 22% income tax withholding rate that employers may use on bonuses paid separately from regular pay, rising to a mandatory 37% on supplemental wages above $1 million in a year (IRS Publication 15). Social Security and Medicare tax of 7.65% also apply. The 22% is only withholding; your real tax depends on your bracket.

## Key facts

- Optional flat federal withholding on bonuses: 22%
- Mandatory rate on supplemental wages over $1 million: 37%
- FICA on a bonus: 7.65% (6.2% up to $184,500 plus 1.45%)
- Federal withholding plus FICA on a $10,000 bonus: $2,965 before state tax
- Special tax rate on bonuses at filing: None; normal 2026 brackets apply

## What is the bonus tax rate in 2026?

The bonus tax rate most people see is 22%, the flat federal income tax withholding rate an employer may apply to a bonus paid separately from regular wages, as set out in section 7 of IRS Publication 15 (2026). No other percentage is allowed under that flat method. Once your bonuses and other supplemental wages from an employer pass $1 million in a calendar year, the excess must be withheld at 37%.

The IRS calls bonuses **supplemental wages**, so the supplemental wage tax rate and the bonus tax rate are the same thing. Commissions, severance pay, awards, prizes, back pay, retroactive raises and payments for accumulated sick leave fall in the same category. Employers may choose to treat overtime and tips as regular wages instead.

## How much tax comes out of a bonus check?

Four amounts come out of a typical bonus: 22% federal income tax, 6.2% Social Security tax, 1.45% Medicare tax, and state income tax where your state has one. On a $10,000 bonus paid with the flat method, the federal pieces add up to $2,965.

| Item | Rate | Amount |
| --- | --- | --- |
| Federal income tax | 22% | $2,200 |
| Social Security tax | 6.2% | $620 |
| Medicare tax | 1.45% | $145 |
| State income tax | Varies by state | Check your state |
| Net before state tax |  | $7,035 |

Withholding on a $10,000 bonus using the 22% flat method, 2026

If your year-to-date wages from that employer have already passed the $184,500 Social Security wage base, the $620 disappears. If they pass $200,000, the employer adds 0.9% Additional Medicare Tax. Our [FICA tax](https://taxbracketsdesk.com/payroll-tax) overview explains both limits, and the [Social Security tax](https://taxbracketsdesk.com/payroll-tax/social-security-tax-wage-base) page shows how a large bonus can make you hit the cap sooner.

## Flat 22% method vs the aggregate method

Employers have two ways to withhold on a bonus of $1 million or less, and the choice explains why two coworkers can see very different deductions on the same bonus.

- **Flat (percentage) method:** 22% of the bonus, ignoring your Form W-4. Allowed only when the bonus is identified separately and income tax was withheld from your regular wages this year or last year.
- **Aggregate method:** the bonus is added to regular wages for the pay period, tax is figured on the total as if it were one normal paycheck, and the tax already withheld from regular wages is subtracted. This method uses your Form W-4.
- **Bonus included in a regular check without a separate amount:** the employer must withhold on the total as a single regular payment.

The aggregate method often withholds more than 22%. Withholding tables treat each paycheck as if it repeats all year, so a $4,000 biweekly paycheck plus a $6,000 bonus is withheld on as if you earned $10,000 every two weeks, about $260,000 a year. That can push part of the check into the 32% or 35% withholding range for one pay period.

## Is a bonus taxed more than salary?

No. When you file, a bonus is ordinary wage income added to box 1 of your Form W-2 and taxed through the same [2026 tax brackets](https://taxbracketsdesk.com/federal-tax-brackets/tax-brackets-2026-irs) as your salary. The 22% is a prepayment; the return decides the real amount, and any difference becomes part of your refund or balance due.

The table compares the $2,200 withheld on a $10,000 bonus with the extra 2026 income tax that bonus really creates for a single filer taking the $16,100 standard deduction and no other income.

| Salary before bonus | Bracket the bonus lands in | Real extra income tax | Versus $2,200 withheld |
| --- | --- | --- | --- |
| $40,000 | 12% | $1,200 | $1,000 over-withheld |
| $70,000 | 22% | $2,200 | Matches |
| $200,000 | 24% | $2,400 | $200 under-withheld |

Extra federal income tax from a $10,000 bonus, single filer, 2026

The bonus is taxed at your top rate because it sits on top of your other income. That is how marginal rates work for any extra dollar, as the [marginal tax rate](https://taxbracketsdesk.com/federal-tax-brackets/marginal-tax-rate-explained) page explains, not a penalty on bonuses. The same logic applies to extra hours, covered in [does overtime get taxed more](https://taxbracketsdesk.com/new-tax-law/does-overtime-get-taxed-more).

## What is the 37% rule for bonuses over $1 million?

When supplemental wages paid to one employee in a calendar year exceed $1 million, the employer must withhold 37% on the amount above $1 million, regardless of the employee's Form W-4 (Publication 15, section 7). Payments from all businesses under common control count toward the $1 million.

Example: an executive receives $1.5 million in bonuses in 2026. If the employer uses the flat method for the first $1 million, it withholds $220,000 (22%) on that part and $185,000 (37%) on the other $500,000, for $405,000 of federal income tax withholding.

## How much state tax is withheld on a bonus?

State withholding on bonuses varies. Some states publish their own flat supplemental rate, some require employers to use regular withholding tables, and states with no wage tax withhold nothing. Your pay stub shows the state amount; the rate itself comes from your state revenue department, and our [state income tax rates](https://taxbracketsdesk.com/state-taxes) page lists what each state charges when you file.

## What to do if too much or too little was withheld from your bonus

1. Find your likely bracket for the year. If it is 10% or 12%, the flat 22% probably over-withheld, and the excess comes back as part of your refund.
2. If you are in the 24% bracket or higher, the 22% will fall short. Add extra withholding on Form W-4, line 4(c), for the rest of the year; our [W-4 withholding guide](https://taxbracketsdesk.com/payroll-tax/w-4-withholding-guide) shows how.
3. If you expect to owe $1,000 or more when you file, compare your total withholding with the estimated tax safe harbor.
4. Ask HR whether your retirement plan lets you defer part of the bonus into a 401(k). Deferrals lower income tax withholding, but Social Security and Medicare still apply.
5. Keep the final pay stub for the bonus and check it against box 2 of your Form W-2 in January.

> **Bonus paid on a Form 1099:** If a company paid you a bonus or award as a nonemployee on Form 1099-NEC, nothing was withheld and self-employment tax may apply instead of FICA. Run the figure through our [self-employment tax calculator](https://taxbracketsdesk.com/payroll-tax/self-employment-tax-calculator).

## Common questions

### Why was 40% taken out of my bonus?

Adding 22% federal withholding, 7.65% FICA and state tax can easily reach 35% to 40%. If your employer used the aggregate method, federal withholding alone may have been higher than 22% because the bonus was treated as part of a single, larger paycheck.

### Can I ask my employer to withhold less on my bonus?

Not under the flat method, which is fixed at 22% and ignores Form W-4. Under the aggregate method, your W-4 does affect the amount, but any change also applies to your regular paychecks.

### Are bonuses taxed at 22% or 25%?

The flat federal bonus withholding rate is 22% for 2026. The 25% rate applied before 2018; it is no longer used.

### Does a bonus count toward the no tax on overtime deduction?

No. The overtime deduction covers only the premium part of FLSA-required overtime pay. A bonus is supplemental wages that stay fully taxable.

### Is a signing bonus taxed differently?

No. A signing bonus is supplemental wages, withheld at the flat 22% or with the aggregate method, and it is subject to Social Security and Medicare tax like any other bonus.

## Sources

- [Publication 15 (2026), Employer's Tax Guide, section 7 Supplemental Wages](https://www.irs.gov/pub/irs-pdf/p15.pdf)
- [Topic 751, Social Security and Medicare withholding rates](https://www.irs.gov/taxtopics/tc751)
- [Rev. Proc. 2025-32 (2026 tax brackets and standard deduction)](https://www.irs.gov/pub/irs-drop/rp-25-32.pdf)
- [Publication 505, Tax Withholding and Estimated Tax](https://www.irs.gov/pub/irs-pdf/p505.pdf)