Last updated
Last checked 2026-11-07. Federal withholding rules change — always confirm on the official pages linked below.
The rules described here are the ones in the 2026 edition of Publication 15 (Circular E), which governs withholding for tax year 2026.
Work out what a bonus is actually worth to you with the calculator on this page — the flat rate is only the first number.
In Publication 15's terms, a bonus paid separately from regular wages is a supplemental wage. The classification matters because it unlocks a second method.
With regular wages, the employer works from your Form W-4 (IRS). With supplemental wages, there is a shortcut: withhold a flat 22% and be done. That is a convenience for the payroll system, not a statement about you.
Two people with very different incomes can see the same 22% taken from a bonus. One is in the 12% bracket and will get much of it back. The other is in the 24% bracket and will owe a little more in April.
The flat rate does not know either of them. It is fixed at 22% by rule, so it over-withholds for lower earners and under-withholds for higher earners. That is not an error in payroll. It is what the method is designed to do.
The consequence is worth stating plainly: the 22% on the stub tells you almost nothing about what the bonus costs you. To know that, you need your marginal rate for the year.
The 22% shortcut has a condition attached. The employer may use it only if it already withholds income tax from your regular wages — either this year or last year.
If the condition is not met, the other method applies — Publication 15 calls it method 1b. The bonus is added to the regular wages for the same pay period, and the withholding is worked out on the combined amount rather than on a flat rate.
Everything above is federal income tax. FICA is a separate withholding on wages: 6.2% for Social Security and 1.45% for Medicare, 7.65% combined, paid by the employee and matched by the employer (IRS Topic 751).
Only the Social Security part has a ceiling. For 2026 it stops once wages pass $184,500; Medicare applies to all of it (IRS Topic 751). Above $200,000 of Medicare wages, an additional 0.9% applies (IRS Topic 560).
So the 22% is not the only number taken out of a bonus. A bonus that "disappears" is usually showing income tax and FICA together.
Withholding is a prepayment. The amount that matters is computed on your return, where the bonus is added to your other income and taxed at whatever rate applies to that slice of income.
That has a practical consequence people often miss: a bonus can push part of your ordinary income into a higher bracket. If your salary already fills the 12% bracket, the top of the bonus may be taxed at 22% even though the flat withholding also took 22%. If your salary fills the 22% bracket, part of the bonus lands in 24%. The bonus is not taxed at one rate; it is taxed at the rates its dollars reach.
You can see the shape of this in any progressive rate table.
Take two single filers, both taking the standard deduction of $16,100 for 2026 and paying no state income tax. Both receive a $5,000 bonus paid separately, and both employers use the flat rate: $1,100 withheld.
Filer A earns $52,000 a year — $1,000 a week. Taxable income is $35,900, inside the 12% bracket, which for a single filer in 2026 runs from $12,400 to $50,400. With the bonus, taxable income is $40,900: still the 12% bracket. So the $5,000 is taxed at 12%, or $600. The extra $500 comes back at filing.
Filer B earns $130,000 a year. Taxable income is $113,900, inside the 24% bracket, which runs from $105,700 to $201,775. With the bonus it is $118,900: still 24%. So the $5,000 is taxed at 24%, or $1,200. At filing, $100 more is owed.
Same bonus, same withholding, different outcome. The variable is the filer's other income, which payroll never sees.
Note what the arithmetic also shows: a $52,000 earner stays in the 12% band on a $5,000 bonus, because the 24% band does not start until $105,700 of taxable income. Reaching it takes a much larger salary, or a bonus large enough to fill that gap.
There is one place where the flat rate changes. Once supplemental wages for the year pass $1,000,000, the excess is withheld at 37%, and the employer applies that rate without regard to the Form W-4.
For most people this line never comes up. Below it, the 22% applies to the whole bonus, not just part of it.
This page covers federal withholding only; state income tax is not part of the 22%.
It also does not cover equity compensation, which has its own withholding rules, or bonuses paid after someone leaves the company.
Put your own salary and bonus into the calculator on this page to see what the 22% leaves in your pocket.
Updated 2026-11-08 · Sources retrieved 2026-11-07
This is a general explanation of how federal withholding works, not tax advice. Your own result depends on your full return. For anything you will act on, check the IRS pages linked above or ask a tax professional.
We check every report against the official source and update the page. See how on our Corrections.
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