Bonus Tax Calculator

The IRS classifies bonuses as supplemental wages. When paid separately from your regular paycheck, employers must withhold at a flat 22% rate for supplemental wages under $1 million per year. This is an IRS requirement, not your actual tax rate. If your effective tax rate is lower than 22%, you will receive the difference back as a refund when you file your return.

Bonuses are taxed as ordinary income, not at a special bonus rate. The 22% withheld is a prepayment of your income tax. When you file, your bonus is added to your other income and taxed at your actual effective rate. If 22% is more than your effective rate, you get a refund. If you are in the 32%, 35%, or 37% bracket, you may owe additional tax on the bonus beyond what was withheld.

The flat rate method withholds 22% from the bonus directly. Simple and consistent. The aggregate method combines your bonus with a regular paycheck, calculates withholding on the combined total using the wage bracket tables, then subtracts regular paycheck withholding. For earners in the 10–12% bracket, the aggregate method results in lower withholding than flat 22%. For high earners (32%+), aggregate often withholds more. Your employer chooses the method.

Yes. Social Security (6.2%) and Medicare (1.45%) apply to bonuses the same as regular wages. The 2026 SS wage base is $184,500. If your year-to-date wages plus the bonus exceed $184,500, SS tax stops once the limit is hit. If your YTD wages already exceed $184,500 before the bonus, no SS is withheld from the bonus at all. Medicare has no cap and always applies.

The IRS requires employers to withhold at 37% (the top rate) on supplemental wages that exceed $1,000,000 in a calendar year. The first $1M is still withheld at 22%; only the excess above $1M is withheld at 37%. This is a withholding rule only — your actual tax rate depends on your total income and filing status.

You have limited control over withholding method — your employer chooses. However, you can contribute to a 401(k) or HSA to reduce taxable income overall. Bonus amounts can often be deferred to a 401(k) up to the $24,500 limit (2026), reducing both the bonus tax and income tax. Some employers allow employees to request additional withholding adjustments via their W-4.

No. Signing bonuses, performance bonuses, referral bonuses, and other lump-sum payments are all treated as supplemental wages and taxed the same way — 22% flat withholding if paid separately from regular wages. They are all reported on your W-2 and included in ordinary income on your tax return.

No. The OBBBA No Tax on Overtime deduction applies specifically to overtime pay for nonexempt employees (premium pay for hours above 40 per week), not to bonuses, commissions, or other supplemental wages. Overtime is also subject to payroll withholding at time of payment — the deduction is claimed on your tax return, not at payroll. Bonuses remain fully taxable as supplemental wages.

State bonus withholding rules vary. Most states tax bonuses as ordinary income at your regular rate. Some states have their own supplemental flat rate. Nine states have no income tax at all (TX, FL, NV, WA, WY, SD, AK, NH, TN). Enter your state rate in the field above to include state tax in the calculation. The state withholding shown is an estimate — your state may have different supplemental rules.

Restricted Stock Units (RSUs) are taxed as ordinary income at vesting, not when granted. The fair market value of shares on the vesting date is treated as supplemental wages and generally withheld at the 22% supplemental rate (or 37% above $1M). Additional capital gains tax may apply when you later sell the shares. This calculator covers cash bonuses; RSU taxation involves additional complexity.