Bonus Tax Calculator
Calculate how much of your bonus you actually take home for 2025-2026. Compare flat 22% supplemental withholding vs aggregate method, and see your real tax owed vs what is withheld.
Most employers use the flat 22% rate for bonus withholding.
Net Take-Home from Bonus
$7,035
from $10,000 bonus (Single, 2026)
Total Withheld
$2,965
Effective Rate
29.6%
Withholding Breakdown
Flat 22% supplemental rate
Withholding vs Actual Tax Owed
The difference between withholding and actual tax will be settled when you file your return.
Bonuses Are Taxed Like Regular Income
Your bonus is not taxed at a higher rate. It is simply withheld at a flat 22% for convenience. Your actual tax rate depends on your total annual income and marginal bracket. Any over- or under-withholding is reconciled when you file your tax return.
How Bonus Taxes Actually Work
Flat 22% Withholding
Most employers withhold a flat 22% for federal tax on bonuses up to $1M. Above $1M the rate is 37%. This is just withholding, not your actual tax rate.
Aggregate Method
Some employers combine your bonus with your regular paycheck and calculate withholding on the total. This can result in higher withholding since it looks like a larger paycheck.
Settled at Filing
Regardless of withholding method, your actual tax on the bonus depends on your total annual income. Over-withholding means a refund; under-withholding means you owe at filing time.
Bonus Tax Strategies
Why Your Bonus Seems Heavily Taxed
The flat 22% withholding plus FICA taxes can make it look like nearly a third of your bonus disappears. But this is just withholding. If your marginal rate is lower than 22%, you will get some back as a refund. If it is higher, you may owe more at filing.
Maximize Your 401(k)
Contributing part of your bonus to a 401(k) reduces your taxable income dollar for dollar. If your employer allows bonus deferrals, this is one of the most effective ways to reduce the tax hit on a large bonus.
Business Owner Bonus Timing
If you own a business and pay yourself a bonus, timing matters. Paying bonuses in a lower-income year or splitting across tax years can reduce the marginal rate applied to the bonus income.
How Supplemental Wage Withholding Works in 2026
The IRS treats bonuses, commissions, overtime, and severance as supplemental wages under IRS Publication 15 (Circular E). Employers must choose between two federal withholding methods when paying supplemental wages:
| Method | Rate | When Used |
|---|---|---|
| Percentage (flat) method | 22% on first $1M; 37% above $1M | Most common; bonus paid separately from regular pay |
| Aggregate method | Marginal rate based on combined pay | Bonus combined with regular paycheck |
The 22% flat rate is simply a withholding convenience -- it is not a special tax rate on bonuses. Your actual tax on the bonus depends on your total annual income and marginal bracket. If your marginal rate is 12%, the employer over-withholds and you get a refund. If your marginal rate is 32%, the employer under-withholds and you owe additional tax when filing.
For supplemental wages exceeding $1,000,000 in a calendar year, the mandatory withholding rate jumps to 37% -- matching the top federal bracket. This applies to the amount above $1M only; the first $1M is still withheld at 22%.
FICA Taxes on Bonus Income
Bonuses are subject to the same FICA taxes as regular wages. For 2026, the rates are:
- Social Security: 6.2% employee / 6.2% employer on wages up to the $184,500 wage base. Once your year-to-date wages (salary + bonus) exceed $184,500, no additional Social Security tax applies to the excess.
- Medicare: 1.45% employee / 1.45% employer on all wages with no cap.
- Additional Medicare Tax: 0.9% employee-only on wages exceeding $200,000 (single) or $250,000 (MFJ). This is not matched by the employer.
A mid-year bonus can push you past the Social Security wage base, stopping the 6.2% withholding on subsequent paychecks. Conversely, a year-end bonus after you have already exceeded $184,500 incurs zero additional Social Security tax. The timing of your bonus relative to year-to-date wages directly affects the FICA portion.
Total effective FICA on a bonus ranges from 1.45% (if above SS wage base and below Medicare threshold) to 8.55% (6.2% SS + 1.45% Medicare + 0.9% Additional Medicare).
State Supplemental Wage Tax Rates
Many states impose their own supplemental wage withholding rates separate from federal rules. For 2026, selected state supplemental rates include:
| State | Supplemental Rate | Notes |
|---|---|---|
| California | 10.23% | Flat rate on bonuses; separate from regular withholding |
| New York | 11.70% | Includes state + city for NYC residents |
| Oregon | 8% | Flat supplemental rate |
| Colorado | 4.40% | Flat income tax state |
| Texas, Florida, Nevada | 0% | No state income tax |
In states with progressive income taxes, the aggregate method can result in significantly higher withholding than the flat supplemental rate. Some states (like Pennsylvania at 3.07%) have low flat rates that apply uniformly. Moving a bonus into a no-income-tax state is not effective if you earned the income while working in a taxing state -- sourcing rules apply.
Bonus Timing and Tax Planning Strategies
The timing of bonus payments can meaningfully affect your tax outcome:
- Year-end bonus in December vs. January: Deferring a bonus to January pushes the income into the next tax year, which matters if you expect lower income next year or are near a bracket boundary. A $20,000 bonus taxed at 24% costs $4,800 in federal tax; at 22% it costs $4,400 -- a $400 difference from timing alone.
- 401(k) deferral on bonus: If your employer allows bonus deferrals to your 401(k), contributing the full bonus reduces taxable income dollar-for-dollar. The 2026 employee 401(k) limit is $23,500 ($31,000 with catch-up for age 50+). A $15,000 bonus deferred entirely to a traditional 401(k) at the 24% bracket saves $3,600 immediately.
- Charitable donation offset: A large bonus year is an ideal time to front-load charitable giving or fund a Donor Advised Fund (DAF), which generates an immediate itemized deduction up to 60% of AGI for cash contributions.
- Estimated tax payments: If the flat 22% withholding undershoots your actual bracket, consider making an additional Form 1040-ES estimated payment for the quarter you receive the bonus to avoid the underpayment penalty under IRC Section 6654.
Related Calculators
Official References
This calculator uses current IRS supplemental wage and withholding rules:
- IRS Publication 15 (Circular E) — Employer's Tax Guide
Official guidance on withholding methods for supplemental wages
- IRC Section 3402 — Income Tax Collected at Source
Federal withholding requirements for wages and supplemental pay
- Supplemental Wage Withholding Rules
22% flat rate for bonuses under $1M, 37% for amounts over $1M
This calculator provides estimates. Your actual tax liability may vary. State tax rates are simplified top marginal rates. Consult a tax professional for personalized advice. Rates accurate as of March 2026.