Two withholding methods
| Method | How it works | Effect |
|---|---|---|
| Percentage (flat) method | 22% federal on the bonus (37% on supplemental wages over $1 million) | Simple; common for separate bonus checks |
| Aggregate method | Bonus is added to a regular paycheck and withheld as if you earned that much every period | Can look like very high withholding that period |
FICA and state taxes
Social Security (6.2% until the wage base) and Medicare (1.45%) apply. Many states have their own flat supplemental withholding rate; others use regular tables.
Your real tax rate
At tax time, your bonus is just more income. If your marginal federal rate is 12%, the 22% withheld may be partly refunded; if it’s 24% or more, you may owe.
Keep more of it
- Direct some of the bonus to your 401(k) if your plan allows.
- Time a year-end bonus for January if you expect a lower income next year (ask your employer, not always possible).
Estimate yours with the bonus tax calculator.
