How Much Tax Will Be Taken Out of My Bonus? The 22% Rule and More

Expect roughly 30% to 40% of a bonus to be withheld before the money reaches you. How much tax is taken out of a bonus depends on the method your employer uses for federal income tax, whether Social Security still applies to your earnings for the year, and what your state and any local jurisdiction charge on supplemental wages. The IRS classifies bonuses as supplemental wages, and the most common setup is a flat 22% federal withholding, plus 6.2% Social Security, 1.45% Medicare, and any applicable state or local tax on top.

How Federal Income Tax Is Withheld From a Bonus

Your employer picks one of two methods laid out in IRS Publication 15. The choice can noticeably change what your pay stub shows, even though your W-2 total for the year comes out the same either way.¹

The Flat 22% Method

Most payroll systems default to withholding a flat 22% from a bonus paid separately from regular wages, regardless of your tax bracket or what you put on your Form W-4. On a $5,000 bonus, that is exactly $1,100 for federal income tax before anything else comes out.¹

Once your total supplemental wages for the calendar year cross $1 million, every dollar above that threshold is withheld at 37%, the top individual rate. Your W-4 does not change this.¹

The Aggregate Method

Some employers combine the bonus with your regular paycheck and calculate withholding on the whole thing using the tables that match your W-4. They subtract what would have been withheld from your normal wages alone, and the remainder is taken from the bonus.¹

This approach often withholds more than a flat 22% would, because the combined amount briefly looks like your normal pay-period earnings and pushes the calculation into higher brackets. The extra is not lost. It gets reconciled on your annual return. But it does shrink your immediate take-home.

Payroll Taxes That Come Out No Matter What

Bonuses face the same payroll taxes as regular wages, and these are automatic. The method your employer uses for income tax does not affect them.

Social Security (OASDI) is 6.2% of the gross bonus, but only up to the annual wage base. For 2026 the cap is $184,500. If your year-to-date earnings already exceed that, no Social Security tax comes out of the bonus.²³
Medicare is 1.45% of the entire gross bonus, with no cap.²
Additional Medicare Tax of 0.9% kicks in once your wages for the year pass $200,000. Employers start withholding it at that point regardless of filing status. Joint filers whose actual threshold is $250,000 sort out any overpayment on the return.⁴

State and Local Tax on Bonuses

Most states with an income tax also withhold from bonuses. Many set a flat supplemental rate distinct from their regular brackets, and those rates run from roughly 1.5% to nearly 12% depending on the state. A few states have no separate supplemental rate and require employers to withhold on bonuses at the same rate as ordinary wages.

If you live in a state with no individual income tax, nothing comes out at the state level. Some cities, counties, and school districts still impose their own local income taxes, usually small percentages, that apply to supplemental wages.

A Worked Example on a $5,000 Bonus

Here is how the numbers stack up using the flat 22% method, assuming you haven’t hit the Social Security wage base and your state has a 5% supplemental rate:

Federal income tax at 22%: $1,100
Social Security at 6.2%: $310
Medicare at 1.45%: $72.50
State income tax at 5%: $250
Total withheld: $1,732.50
Net take-home: $3,267.50, or about 65% of the gross

Your own result will move around this baseline. A higher state supplemental rate takes more. A no-income-tax state skips that line entirely. If your year-to-date pay has already crossed $184,500, you keep the $310 Social Security piece. Pre-tax deductions can also lower the amount that gets taxed in the first place.

Ways to Reduce the Tax Bite

What gets withheld is not the final word on what you actually owe, and a few adjustments can either shrink the deduction now or improve where you land at filing time.

Route the Bonus Into a Traditional 401(k)

If your employer’s plan allows it, you can direct some or all of the bonus into a traditional 401(k). Pre-tax contributions reduce the taxable portion of the bonus, which cuts federal and, in most states, state withholding. For 2026 the elective deferral limit is $24,500 across the year. Workers 50 or older can add $8,000 in catch-up contributions, and those aged 60 through 63 get a higher catch-up limit of $11,250.⁵

Check with payroll before the bonus runs. Some plans let you set a separate deferral percentage just for bonus checks. Others apply your regular contribution rate. Roth 401(k) deferrals don’t reduce current withholding because they are after-tax.

Adjust Your W-4

Step 4(c) of Form W-4 lets you request extra federal tax withheld each pay period, which can help if a bonus would otherwise leave you underwithheld at year end. The IRS suggests running its online Tax Withholding Estimator when bonuses are part of your pay.⁶

W-4 changes apply going forward to every paycheck, not just the bonus. If you dial up withholding ahead of a bonus and don’t reset it afterward, your regular pay keeps taking the hit.

What Settles Up at Tax Time

Everything withheld from a bonus is a prepayment against your annual tax bill. When you file, the bonus is added to your other wages and taxed under the regular progressive brackets, not the flat 22%.

If your effective rate ends up below 22%, the extra comes back as a refund. If the bonus pushes your income into the 24%, 32%, or higher bracket, the 22% withholding wasn’t enough and you’ll owe the difference in April.⁷

A large enough gap between what was withheld and what you owe can also trigger an underpayment penalty. You generally avoid it if your total withholding and estimated payments cover at least 90% of the current year’s tax or 100% of last year’s tax, rising to 110% if your prior-year adjusted gross income was over $150,000. No penalty applies if the amount you owe at filing is under $1,000.⁸

1
Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
2
Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
3
Social Security Administration. Contribution and Benefit Base
4
Internal Revenue Service. Topic No. 560, Additional Medicare Tax
5
Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500
6
Internal Revenue Service. Form W-4 (2026), Employee’s Withholding Certificate
7
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
8
Office of the Law Revision Counsel. 26 USC 6654 – Failure by Individual to Pay Estimated Income Tax