Why Is My Bonus Taxed at 22%?

Bonuses are "supplemental wages," not regular wages

The IRS treats bonuses, commissions, severance pay, and similar one-off payments as "supplemental wages" — a separate category from your regular salary or hourly pay, with its own withholding rules under IRS Publication 15, Section 7. Employers have two options for withholding on supplemental wages, and which one they use is often out of your control.

Option 1: the flat 22% rate

If your employer withheld income tax from your regular wages in the current or immediately preceding calendar year, they're allowed to simply withhold a flat 22% from a bonus paid separately from your regular paycheck — no other percentage is allowed under this option. This rate is tied to the federal 22% tax bracket and has held steady since the 2017 tax law changes; it remains 22% for 2026.

22% is just an approximation used for withholding convenience. If your actual marginal tax rate is lower than 22% (common for many middle-income earners), too much gets withheld from the bonus — and you get the difference back as part of your refund when you file. If your marginal rate is higher than 22%, the opposite happens and you may owe more at filing. Either way, the bonus is ultimately taxed at your real rate once you file — 22% is only what's withheld in advance.

Option 2: the aggregate method

Employers can also combine your bonus with a regular paycheck and withhold on the total as if it were one single, larger payment — using your normal W-4 elections and the standard withholding tables. This often withholds more than 22% for higher earners (because combining the bonus with regular pay can push the whole payment into a higher withholding bracket for that pay period), which is the scenario behind the common complaint that "my bonus got taxed way more than 22%." What actually happened is your employer used the aggregate method, and that pay period's withholding was calculated on a bigger combined number — your actual final tax liability is unaffected either way.

If income tax wasn't withheld from your regular wages in the current or immediately preceding calendar year, the flat rate isn't available at all — your employer is required to use the aggregate method instead.

The $1,000,000 rule

If your supplemental wages from one employer exceed $1,000,000 in a calendar year, the excess over that threshold must be withheld at 37% — the top federal rate — regardless of what your W-4 says. This threshold is a fixed dollar figure, not adjusted for inflation, and applies per employer (wages from separate businesses under common control are combined for this test, but not wages from genuinely unrelated employers).

Does this affect Social Security and Medicare too?

No — regardless of which income-tax withholding method applies, your bonus is still subject to Social Security and Medicare tax the exact same way regular wages are (see what FICA actually is). Only the federal income-tax withholding method differs for supplemental wages.

Estimate your own bonus withholding

The bonus tax calculator computes the flat-rate withholding for your exact bonus amount, flags the $1,000,000 threshold if it applies, and can compare against an aggregate-method estimate too.