Bonus Tax Calculator

The IRS flat withholding rate for supplemental wages (bonuses) under $1 million is 22% for federal income tax in 2026. On top of that, Social Security (6.2%) and Medicare (1.45%) are withheld, bringing total federal withholding to approximately 29.65% for most employees. If your bonus exceeds $1 million, the portion above $1 million is withheld at 37%. However, your actual tax rate at year-end depends on your total income and tax bracket.

Several reasons: the flat 22% federal rate applies to all bonuses under $1 million; FICA taxes (7.65%) are also withheld; and some employers use the aggregate method, which combines your bonus with your regular paycheck and can push the calculated withholding higher. If your employer used the aggregate method on a large bonus, the effective withholding rate can exceed 30–40%. The good news: any over-withholding comes back as a refund when you file your tax return.

For withholding purposes, yes — bonuses are classified as "supplemental wages" and have their own withholding rules. However, for your actual tax liability when you file, bonuses are taxed exactly the same as regular income — at your marginal income tax rate. The withholding method only affects the timing and amount taken from your paycheck. If too much was withheld, you get a refund. If too little was withheld, you owe the difference when you file.

The flat rate method withholds a straightforward 22% federal income tax on your bonus, separate from your regular paycheck. The aggregate method adds your bonus to your regular paycheck wages and calculates withholding on the combined amount as if it were one big paycheck. Because the aggregate method treats the bonus month as having unusually high income, the withholding rate is often higher — sometimes significantly so. Employers choose the method, not employees. Both are IRS-compliant.

You cannot change how your employer withholds on your bonus — that is their choice per IRS rules. However, you can offset the impact. If you have a 401(k), contributing pre-tax from your bonus (if your employer allows it) reduces the taxable amount. You can also adjust your W-4 after receiving your bonus to reduce withholding on future paychecks. If you expect a large refund due to bonus over-withholding, adjusting your W-4 after bonus season means more take-home on remaining paychecks.

Yes. Your bonus counts as wages for Social Security purposes. In 2026, the Social Security wage base is $176,100. Once your total wages (salary + bonus) exceed this amount for the year, Social Security withholding (6.2%) stops. Medicare (1.45%) has no wage cap and is withheld on the full bonus amount. If you have already exceeded the Social Security wage base before receiving your bonus, your employer will not withhold Social Security from the bonus — only Medicare.

If you receive a bonus after leaving (separation bonus, deferred bonus, or clawback-related pay), it is still taxable income in the year received. The same withholding rules apply. If you repay a bonus in a later year (due to a clawback clause), you may be able to deduct the repaid amount on your taxes — either as a miscellaneous deduction or, if the amount exceeds $3,000, using the "claim of right" rule which may allow you to recalculate taxes for the year you paid the higher tax. Consult a tax professional for clawback situations.

Your bonus is added to your total annual income when calculating your actual tax liability. If the combined amount crosses a bracket threshold, the portion above that threshold is taxed at the higher rate — but only that portion, not your entire income. For example, if a $10,000 bonus pushes $4,000 into the 24% bracket (from the 22% bracket), only that $4,000 is taxed at 24%. The rest remains at lower rates. Use our Tax Bracket Calculator to see exactly how your bonus affects your brackets.

No — both are classified as supplemental wages and taxed identically. Signing bonuses, performance bonuses, retention bonuses, referral bonuses, holiday bonuses, and severance pay are all subject to the same 22% flat rate or aggregate withholding method. The only distinction: some signing bonuses may have clawback provisions requiring repayment if you leave within a certain period. The tax treatment of clawbacks (if you must repay) depends on timing and amount — consult a tax professional if you face this situation.

Strategies to make your bonus work tax-efficiently: Maximize 401(k) contributions — if you can contribute your bonus pre-tax, it reduces taxable income this year. Fund a Traditional IRA (up to $7,000 in 2026 if eligible). Contribute to an HSA if you have a qualifying health plan ($4,300 individual / $8,550 family). Invest in a taxable brokerage account with tax-efficient funds if you've maxed tax-advantaged accounts. Contribute to a 529 for education savings (state deduction in some states). The withholding on the bonus is fixed — these strategies reduce your overall tax bill at year-end.