What Is a Withholding Percentage? Federal, State, and Bonus Rates

Your withholding percentage is the share of gross pay that gets pulled from each paycheck and sent to the government before you ever see the money. For 2026 it isn’t a single number: federal income tax runs on a progressive scale from 10% to 37%, Social Security takes a flat 6.2% up to a wage cap, and Medicare takes 1.45% on everything you earn. State income tax, when it applies, sits on top of all that. The combined bite is why many workers see 30% or more of their gross pay disappear before the check hits their account.

2026 Federal Income Tax Brackets

Federal income tax withholding is progressive. Only the dollars falling inside each bracket are taxed at that bracket’s rate, not your entire paycheck. For a single filer in 2026:

10% on income up to $12,400
12% from $12,401 to $50,400
22% from $50,401 to $105,700
24% from $105,701 to $256,225
32% from $256,226 to $640,600
35% from $640,601 to $648,100
37% above $648,100

For married couples filing jointly, each threshold roughly doubles. The 10% bracket covers the first $24,800 of taxable income, and the 37% rate begins above $768,700.¹

Your employer does not apply these brackets to your raw paycheck. The withholding calculation first subtracts an amount based on the 2026 standard deduction ($16,100 single, $32,200 married filing jointly, $24,150 head of household) plus any adjustments you claimed on your W-4.¹ The brackets then apply to the resulting adjusted annual wage amount. That is why the withholding tables in IRS Publication 15-T don’t line up perfectly with the tax bracket tables you see at filing time.

Social Security and Medicare Withholding

On top of federal income tax, two flat FICA deductions come out of every paycheck. These rates do not change with income within their applicable ranges.

Social Security withholding is 6.2% of wages, but only on the first $184,500 you earn in 2026.²³ Once year-to-date earnings cross that cap, the 6.2% deduction stops for the rest of the year. Your employer matches your contribution dollar for dollar.

Medicare withholding is 1.45% on all wages with no cap.² If you earn more than $200,000 in a year ($250,000 married filing jointly), your employer must withhold an additional 0.9% on wages above that threshold. The employer does not match the extra 0.9%.⁴

Why Your Bonus Is Withheld at 22%

Bonuses, commissions, and overtime don’t run through the progressive brackets alongside your regular pay. The IRS requires a flat 22% withholding rate on supplemental wages up to $1 million during the calendar year. If total supplemental wages cross $1 million, the excess is withheld at 37%.⁵

The 22% has nothing to do with your actual tax bracket. Someone in the 12% bracket who receives a $5,000 bonus still sees 22% withheld and gets the difference back as a refund at filing time. This is one of the most common sources of confusion when a bonus check comes in smaller than expected. The withholding rate is not the tax rate you’ll ultimately owe on that money.

Other Flat Withholding Rates You May Encounter

A few situations use their own fixed percentages rather than the wage tables.

Backup withholding is a flat 24% that a payer must apply when the IRS can’t verify who’s receiving payment. It kicks in if you failed to give a valid Taxpayer Identification Number, the IRS told the payer your number is wrong, or you underreported income on a prior return.⁶⁵ It applies mostly to interest, dividends, and 1099 freelance income.

Retirement distributions have their own rates. A lump-sum distribution from a 401(k) that doesn’t roll directly into another retirement account has a mandatory 20% federal withholding, and you cannot opt out. The only way to avoid it is a direct rollover.⁷ Other nonperiodic distributions, such as a one-time IRA withdrawal that isn’t an eligible rollover, default to 10% withholding. You can adjust that anywhere from 0% to 100% using Form W-4R.⁸

Nonresident aliens receiving U.S.-source income (investment income, royalties, certain service payments) are generally subject to a flat 30% withholding rate. Tax treaties can lower this, sometimes to zero, but the payer needs proper documentation (typically Form W-8BEN) before applying the reduced rate. Scholarship or fellowship payments to certain nonimmigrant students face a 14% rate.⁹

State Income Tax Withholding

Federal withholding is only part of the picture. Most states also require employers to withhold state income tax. Rates run from 0% in the eight states with no individual income tax to more than 13% at the highest marginal brackets. Some states use a flat rate, others have their own progressive brackets, and a handful of cities and counties layer on local income taxes.

Where you physically work and where you live can both affect which state gets a cut. If you live in one state and commute to another, you may see withholding for both unless the two states have a reciprocity agreement.

How Your W-4 Controls the Percentage

IRS Form W-4 is what tells your employer how much federal income tax to withhold. The information you enter feeds into the IRS withholding tables to produce your per-paycheck deduction.¹⁰ An outdated W-4 is the single biggest reason people end up with a surprise tax bill or an unnecessarily large refund.

The form has five steps. Step 1 captures your filing status. Step 2 accounts for multiple jobs or a working spouse, because the tables assume your paycheck is your household’s only income. Skip Step 2 when you actually have two incomes and your employer will underwithhold, since each job runs its own brackets without knowing about the other. Step 3 lets you claim credits for dependents, which lowers withholding. Step 4 is for fine-tuning: report other income that has no withholding of its own, claim deductions above the standard deduction, or add a specific dollar amount of extra withholding per pay period. That last option, in Step 4(c), is useful if you have freelance income on the side and want to cover its tax through your day job instead of writing quarterly checks.¹⁰

Claiming Exempt

If you had zero federal tax liability last year and expect the same this year, you can write “Exempt” on your W-4 and stop federal income tax withholding entirely. Social Security and Medicare withholding continue regardless. An exempt claim expires every year. You must submit a new W-4 by February 15, or your employer will revert to withholding as if you filed a W-4 with no adjustments.¹¹

Using the IRS Estimator

Rather than guessing at the numbers, the IRS offers a free Tax Withholding Estimator that walks through your income, deductions, and credits and generates a completed W-4 you can hand to your employer. The IRS recommends checking it every January and after any major life change, including a new job, marriage, divorce, a new child, or buying a home.¹²

Most employers accept W-4 updates through an internal payroll portal or HR. There is no limit on how often you can submit a new form, and payroll systems typically process changes within one or two pay cycles. Check your next pay stub after any update to confirm the change took effect.

How Much Withholding Is Enough

If your total withholding and estimated payments fall short of what you owe at filing, the IRS charges an underpayment penalty at the federal short-term rate plus 3 percentage points, compounded daily. For the first quarter of 2026, that rate is 7%. The penalty runs from the date each quarterly payment was due, so falling behind early in the year costs more.¹³

You avoid the penalty entirely by meeting any of these safe harbor thresholds:

You owe less than $1,000 when you file
Your payments cover at least 90% of the tax you owe for the current year
Your payments cover at least 100% of the tax shown on last year’s return (110% if your adjusted gross income exceeded $150,000, or $75,000 if married filing separately)

The prior-year safe harbor is the easiest to work with: take last year’s total tax, divide by four, and make sure at least that much reaches the IRS each quarter through withholding or estimated payments.¹⁴

If you have significant income that no one is withholding on (self-employment, rental income, investment gains), withholding from a W-2 job alone may not get you across a safe harbor line. In that case, either bump up Step 4(c) on your W-4 or send quarterly estimated payments on April 15, June 15, September 15, and January 15 of the following year.¹⁵

1
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
2
Office of the Law Revision Counsel. 26 USC 3101 – Rate of Tax
3
Social Security Administration. 2026 Cost-of-Living Adjustment (COLA) Fact Sheet
4
Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
5
Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide
6
Office of the Law Revision Counsel. 26 USC 3406 – Backup Withholding
7
eCFR. 26 CFR 31.3405(c)-1 – Withholding on Eligible Rollover Distributions
8
Internal Revenue Service. 2026 Form W-4R
9
Office of the Law Revision Counsel. 26 USC 1441 – Withholding of Tax on Nonresident Aliens
10
Internal Revenue Service. Form W-4 (2026) Employee’s Withholding Certificate
11
Internal Revenue Service. Topic No. 753, Form W-4, Employees Withholding Certificate
12
Internal Revenue Service. Tax Withholding Estimator
13
Internal Revenue Service. Quarterly Interest Rates
14
Internal Revenue Service. Underpayment of Estimated Tax by Individuals Penalty
15
Internal Revenue Service. Estimated Tax Payments for Individuals