When your employer pays you a bonus, federal law lets them withhold income tax at a flat 22 percent rate rather than running the payment through your normal W-4 calculation. That is where the 22 percent withholding on bonuses comes from. It is a withholding rate, not a tax rate, and it applies to bonuses along with several other kinds of pay that fall outside your regular salary. Whether you actually owe 22 percent on that money depends on your total income for the year, and any difference gets reconciled when you file.
What the 22 Percent Actually Is
The 22 percent is an estimate your employer sends to the IRS on your behalf. It does not consider your filing status, your dependents, or any extra withholding you asked for on your W-4. The number was chosen because it matches one of the middle federal tax brackets, so for a lot of workers it lands reasonably close to what they will owe. For workers in the 10 or 12 percent brackets it takes too much. For workers in the 32, 35, or 37 percent brackets it takes too little. You settle up either way on your return.
The rate itself comes from the IRS rules for supplemental wages in Publication 15.1Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide The math is straightforward: gross bonus times 0.22. A $5,000 bonus produces $1,100 in federal income tax withholding. A $1,000 bonus produces $220.
Which Payments the Rate Applies To
Bonuses are the most familiar example, but the 22 percent flat rate covers a broader category the IRS calls supplemental wages. That includes commissions, overtime pay, severance pay, back pay, accumulated sick leave payouts, retroactive raises, and reported tips, among others.1Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide The common thread is that these payments sit outside your ordinary salary or hourly wages.
Three conditions must be met before an employer can use the flat rate on a bonus. The payment has to be issued separately from your regular paycheck, or at least broken out clearly on the payroll records. The employer must have already withheld federal income tax from your regular wages at some point in the current year or the prior one. And your total supplemental wages for the year must still be under $1 million.2eCFR. 26 CFR 31.3402(g)-1 – Supplemental Wage Payments If any of those fail, the employer has to use a different method.
Why Your Bonus Sometimes Loses More Than 22 Percent
Even when the flat rate is available, the employer is not required to use it. The alternative is called the aggregate method, and it can pull noticeably more tax from a bonus.
Under the aggregate method, your employer adds the bonus to your regular paycheck for that period and calculates withholding on the combined amount using your W-4 as if this were a normal payday. Because a bonus can be several times the size of a regular check, the withholding tables treat you as though you earn that inflated amount every pay period, which pushes the calculation into a higher bracket than your actual salary warrants. The employer then subtracts what would have been withheld from your regular wages and takes the rest from the bonus.1Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
You do not get to pick which method your employer uses. If your bonus arrived lighter than a 22 percent calculation would have predicted, the aggregate method is the likely reason. Anything overwithheld comes back to you at tax time.
The Other Money Coming Out
The 22 percent covers federal income tax only. Social Security and Medicare taxes come out on top of it.
Social Security is 6.2 percent on wages up to $184,500 in 2026.3Social Security Administration. Contribution and Benefit Base If your year-to-date wages have already passed that cap, no Social Security tax comes out of the bonus. If they have not, the 6.2 percent applies. Medicare is 1.45 percent with no cap, so it applies to every dollar.1Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
Higher earners face one more layer. Once your wages from a single employer cross $200,000 for the year, the employer must withhold an extra 0.9 percent Additional Medicare Tax on every dollar above that line, regardless of filing status. Married couples whose combined household wages stay under $250,000 can claim the overwithholding back on their return.4Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
Put together, a $5,000 bonus for someone still under the Social Security cap loses about 29.65 percent to withholding before it hits the bank: 22 percent federal income tax, 6.2 percent Social Security, and 1.45 percent Medicare. That is roughly $1,483, not the $1,100 the 22 percent figure alone suggests.
What Happens Above $1 Million
The 22 percent flat rate has a ceiling. Once your supplemental wages from a single employer pass $1 million in a calendar year, every additional dollar is withheld at 37 percent, matching the top federal bracket. This rate is mandatory and ignores your W-4.1Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide Employers must track your cumulative supplemental wages across the year and across related businesses under common control, so a single bonus that straddles the threshold gets split: 22 percent up to the line and 37 percent beyond it.
How It All Gets Squared Up at Tax Time
The 22 percent is a prepayment, and prepayments get reconciled. On your Form 1040 all of your income for the year is combined and taxed under the graduated bracket system. Every dollar withheld from every regular and supplemental paycheck is then credited against your actual liability.
If your effective rate on the bonus ends up being lower than 22 percent, the difference comes back in your refund. If it ends up higher, you owe the shortfall. Someone whose top bracket is 12 percent will typically see part of the bonus withholding refunded. Someone in the 32 or 35 percent bracket is often short and should plan for it.
Adjusting Your W-4 If You Keep Owing
If bonuses or commissions leave you owing money every April, you can use Step 4(c) of Form W-4 to add extra withholding to your regular paychecks.5Internal Revenue Service. Form W-4, Employee’s Withholding Certificate The 22 percent on the bonus itself stays the same, but the extra taken from ordinary pay covers the gap. The IRS only cares about the year-end total, not which paycheck the money came from.
A rough way to size the adjustment: multiply the bonus income you expect this year by the difference between your marginal rate and 22 percent, then divide by the number of pay periods left. If you expect $20,000 in bonuses and your marginal rate is 32 percent, that is a 10 percent gap, or $2,000, which across 26 biweekly checks works out to about $77 per period. Overshooting a little is safer than undershooting, since the IRS charges interest on underpayments and refunds overpayments without penalty.