How are bonuses taxed?
The IRS treats a bonus as supplemental wages, the same group as commissions, back pay, severance and awards. A bonus is ordinary income on your tax return, taxed at the same brackets as your salary. What is special is the withholding: how much your employer takes out of the bonus check before you see it.
IRS Publication 15 (2026), section 7, gives employers these rules:
| How the bonus is paid | Federal income tax withholding |
|---|---|
| On its own check, or listed separately, and tax was withheld from your regular pay this year or last year | The employer picks: a flat 22%, or the aggregate method |
| In the same check as regular pay, with no separate amount shown | Aggregate: the whole check is withheld as one regular paycheck |
| No income tax was withheld from your regular pay this year or last year | Aggregate method only |
| The year’s supplemental pay from the employer passes $1 million | 37% on the part over $1 million, whatever your Form W-4 says |
Three details matter:
- The flat rate is exactly 22%. Publication 15 says no other percentage is allowed, so it does not depend on your tax bracket.
- The $1 million mark counts the whole calendar year. Earlier bonuses and commissions from the same employer, and from businesses under common control, count toward it. Only the excess is withheld at 37%.
- Social Security and Medicare apply either way. The method only changes federal income tax withholding.
Overtime and tips can also be treated as supplemental wages, so the same rules can apply to them. The overtime calculator covers how overtime itself is figured.
How does the bonus tax calculator work?
The calculator above runs two separate calculations and shows them side by side.
| Input | What to enter | Why it matters |
|---|---|---|
| Bonus amount | The gross bonus before any deductions | Everything is figured from it |
| Annual salary | Your regular pay from this job for the year | Sets your bracket and the regular paycheck for the aggregate method |
| Pay frequency | Weekly, every two weeks, twice a month or monthly | The aggregate method works one paycheck at a time |
| Filing status | Single, married filing jointly or head of household | Sets your brackets and the 0.9% Medicare threshold |
| State | Where you pay state income tax | Loads that state’s 2026 rules and any bonus rate |
| 401(k) from the bonus | The percent your plan takes from bonuses | Lowers income tax, not Social Security or Medicare |
| How the bonus is paid | On its own (flat 22%) or added to a paycheck | Picks the IRS withholding method |
| More options | Other wages on your return, earlier bonuses, 401(k) from salary, wages paid so far, your state rate | Fine-tunes the bracket, the $1 million test, Social Security and state withholding |
The first calculation is what is withheld: federal income tax by the method you pick, Social Security, Medicare, state income tax and any state payroll programs. Subtract those and your 401(k) deferral from the bonus, and you get the take-home on payday.
The second is the tax the bonus adds. The calculator runs your whole year through the 2026 brackets and standard deduction ($16,100 single, $32,200 married filing jointly, $24,150 head of household) twice, with and without the bonus. The difference is the real tax on the bonus.
The gap between the two is the part that settles when you file. The calculator turns it into a plain sentence, such as “You may get about $500 back when you file.” It assumes one job, a Form W-4 from 2020 or later with nothing in Steps 2 to 4, no credits, and regular paychecks that already withhold about the right amount. City and county taxes are not included. You can copy a link to your numbers, copy the results or print them.
What is the aggregate method for bonuses?
With the aggregate method, payroll adds the bonus to a regular paycheck, figures withholding on the total as if it were one normal paycheck, and subtracts what the regular pay alone would have withheld. The rest comes out of the bonus.
The catch is the word “normal.” Payroll tables annualize each check, so a big check is treated as if you earned that much every payday. The calculator follows the 2026 Publication 15-T percentage method for this. For a single filer earning $60,000, paid every two weeks:
- A regular paycheck withholds about $193.08 of federal income tax.
- The same check with a $5,000 bonus added withholds about $1,320.54.
- So the bonus has $1,127.46 withheld, a little more than the $1,100 the flat 22% rate takes.
The gap grows with the bonus. On a $50,000 bonus, the aggregate method withholds $17,237.70 while the flat rate takes $11,000. Yet the bonus only adds $10,350 of federal tax for the year. The difference is not lost: it comes back when you file.
Publication 15 has its own example. An employee paid $2,000 a month gets a $1,000 bonus. Using the wage bracket tables, the employer withholds $65 from the salary and $179 from the combined $3,000, so $114 comes out of the bonus. The flat rate would have taken $220. The percentage method used in the calculator gives $112.50 for the same case.
Do Social Security and Medicare come out of a bonus?
Yes. A bonus is wages for Social Security and Medicare, and neither depends on the withholding method.
- Social Security: 6.2% until your wages from the employer reach $184,500, the 2026 wage base. If your salary is already past it, nothing more comes out.
- Medicare: 1.45% of the whole bonus, with no cap.
- Additional Medicare Tax: your employer must withhold another 0.9% on wages it pays you over $200,000 in the year, without regard to your filing status or other jobs.
The 0.9% you actually owe depends on your filing status: it applies to wages over $200,000 for single and head of household filers, $250,000 for married couples filing jointly (counting both spouses’ wages) and $125,000 for married filing separately. So a married couple can owe more than was withheld, or get some back. The IRS suggests a larger W-4 withholding or estimated payments if you expect to owe.
Example. On a $190,000 salary, a $50,000 bonus pays no Social Security, because wages are already over $184,500. Medicare is $725 plus 0.9% of the $40,000 above $200,000 ($360), or $1,085.
A traditional 401(k) deferral does not reduce Social Security or Medicare. IRS Publication 525 says elective deferrals are left out of wages for income tax but included in wages for Social Security and Medicare.
How do states tax bonuses?
Nine states have no income tax on wages: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. Every other state taxes a bonus as wages, but withholding methods vary.
These states set a flat rate for withholding on bonuses in 2026, checked on each state’s revenue site in October 2026:
| State | 2026 bonus withholding rate | Notes |
|---|---|---|
| Alabama | 5% | Optional |
| California | 10.23% | Bonuses and stock options; 6.6% for other extra pay |
| Illinois | 4.95% | The rate for all wages |
| Indiana | 2.95% plus county | Bonus checks are figured without exemptions |
| Iowa | 3.8% | Required when federal tax is withheld at the flat rate |
| Maryland | 6.50% plus county | Lump-sum annual bonus, at the top county rate |
| Massachusetts | 5% | Higher above $1,107,750 of wages because of the 4% surtax |
| Michigan | 4.25% | No exemption adjustment |
| Minnesota | 6.25% | Required when paid on a separate check |
| Montana | 5% | Optional |
| New Mexico | 5.9% | When federal tax is withheld at a flat rate |
| New York | 11.70% | Optional; New York City and Yonkers add their own |
| North Carolina | 4.09% | Optional |
| Ohio | 2.75% | Down from 3.5% on January 1, 2026 |
| Oregon | 8% | Optional, for pay on a different day than regular pay |
| Pennsylvania | 3.07% | The flat rate on all pay |
| Virginia | 5.75% | Optional |
| Wisconsin | 3.54% to 7.65% | Optional, set by your yearly salary |
Some states have no flat bonus rate at all. Connecticut tells employers to add a separately paid bonus to the last regular paycheck. Mississippi and New Jersey also figure it with regular wages or their tables. For any state without a rate in the table, the calculator above shows the state tax the bonus adds, which is close to what aggregate withholding takes. If your pay stub shows the rate your employer uses, enter it under More options.
State rates can also over-withhold. On a $5,000 bonus at a $60,000 salary, California withholds $511.50 at 10.23% (plus $65 for State Disability Insurance), but the bonus adds only $300 of California tax. New York withholds $585 against $270 of added tax. The calculator includes state payroll programs like these, which are figured on the bonus the same way they are on your salary.
Why are bonuses taxed so high?
Mostly because of what you see on the pay stub, which is withholding, not tax. Here is a typical case run through the calculator above.
Jordan Lee earns $60,000 a year at Northwind Logistics, files single and lives in a state with no income tax. Jordan gets a $5,000 bonus on its own check.
What the pay stub shows:
- Federal income tax at 22%: $1,100
- Social Security at 6.2%: $310
- Medicare at 1.45%: $72.50
- Total withheld: $1,482.50, or 29.65% of the bonus
- Take-home: $3,517.50
What the bonus really costs in tax:
- Taxable income before the bonus: $60,000 minus the $16,100 standard deduction = $43,900
- Taxable income after: $48,900, still inside the 12% bracket, which runs to $50,400
- Federal income tax added: $5,000 x 12% = $600
- Real tax with Social Security and Medicare: $982.50, or 19.65%
Jordan’s employer withheld $500 more federal tax than the bonus adds. That $500 counts toward Jordan’s 2026 tax bill, so it shows up as a bigger refund or a smaller balance due.
It runs the other way at higher incomes. Dana Ruiz earns $120,000, files single and gets a $10,000 bonus. Taxable income goes from $103,900 to $113,900, crossing from the 22% bracket into 24% at $105,700. The bonus adds $1,800 x 22% + $8,200 x 24% = $2,364, but only $2,200 was withheld, so Dana may owe about $164 when filing. The 2026 tax brackets show where your own income falls.
How much tax will you pay on a $1,000, $5,000, $10,000 or $50,000 bonus?
These figures come from the calculator above for a bonus paid on its own check, with no state income tax and no 401(k) deferral.
Single filer with a $60,000 salary:
| Bonus | Federal withheld (22%) | Social Security and Medicare | Take-home on payday | Federal tax it adds | At tax time |
|---|---|---|---|---|---|
| $1,000 | $220 | $76.50 | $703.50 | $120 | About $100 back |
| $5,000 | $1,100 | $382.50 | $3,517.50 | $600 | About $500 back |
| $10,000 | $2,200 | $765 | $7,035 | $1,550 | About $650 back |
| $50,000 | $11,000 | $3,825 | $35,175 | $10,350 | About $650 back |
The same bonuses at other incomes (withholding and take-home are the same as above):
| Bonus | Single, $120,000 salary: tax it adds | At tax time | Married filing jointly, $90,000 single income: tax it adds | At tax time |
|---|---|---|---|---|
| $1,000 | $220 | About even | $120 | About $100 back |
| $5,000 | $1,164 | About $64 owed | $600 | About $500 back |
| $10,000 | $2,364 | About $164 owed | $1,200 | About $1,000 back |
| $50,000 | $11,964 | About $964 owed | $6,700 | About $4,300 back |
What the tables show:
- The take-home on payday is the same at every income. The flat 22% rate ignores your bracket, so two people with very different salaries see identical bonus checks.
- Your bracket decides the refund. At $60,000 single, the first $6,500 of bonus is taxed at 12% and the rest at 22%, so the refund stops growing at $650.
- Married couples with one income often get the most back. Their wider 12% bracket covers more of the bonus.
- At 24% and above, expect a small balance due. Dana’s case above is typical.
How can you keep more of your bonus?
You cannot skip Social Security and Medicare on a bonus, but you can lower the income tax and avoid a surprise at filing time.
- Defer part of it to a traditional 401(k). If your plan counts bonuses as pay for deferrals, the deferred amount skips income tax withholding and lowers the tax the bonus adds. Plans set their own definition of compensation, and the IRS notes some exclude bonuses, so check yours. On Jordan’s $5,000 bonus, deferring 50% sends $2,500 to the 401(k), cuts federal withholding to $550 and the added tax to $300, while Social Security and Medicare stay at $382.50. The 2026 limit is $24,500, shared with your salary deferrals; see the 2026 401(k) limits.
- Fund an HSA through payroll. If you have an HSA-eligible health plan, contributions through your employer’s cafeteria plan are treated as employer contributions, which are generally free of federal income tax, Social Security and Medicare. The 2026 limits are $4,400 for self-only coverage and $8,750 for family coverage, counting what your employer puts in.
- Know which year the bonus lands in. A bonus is income in the year you receive it or it is made available to you. A check available on December 31 counts for that year even if you deposit it in January. If you expect a lower income next year, ask whether the payment date is flexible, but most employers set it for everyone.
- Fix your withholding if you will owe. If the bonus pushes you into the 24% bracket or higher, add extra withholding on Form W-4 Step 4(c) for your remaining paychecks or use the IRS Tax Withholding Estimator. Spread the amount over the paychecks left in the year; how many pay periods are in a year helps you count them.
- Compare a bonus with a raise. A raise repeats every year and changes your regular withholding. The raise calculator shows what a percentage raise adds to your pay.
If you need a bonus to leave a set amount after taxes, for example when an employer pays a “net” bonus, the gross-up calculator works backward from the take-home you want.
These are general federal and state rules for 2026. Because your other income, credits, deductions and state rules can change the result, a tax professional can tell you how a large bonus affects your own return.