How Are Bonuses Taxed? Bonus Tax Rate Explained (2026)

A bonus is generally taxable wage income. The amount withheld from the bonus check may look different from a regular paycheck because payroll departments can use special supplemental-wage withholding rules.

Two Federal Withholding Methods

Employers generally use either a separate supplemental-wage method or an aggregate method that combines the bonus with regular wages for withholding. The IRS supplemental wage rate for 2026 — check IRS Publication 15 for the current percentage. Your final annual tax liability is determined when you file your return.

FICA Still Applies to Bonuses

Bonus wages are generally subject to Social Security and Medicare withholding. From the calculator's official-source data, the employee rates are 6.2% for Social Security and 1.45% for regular Medicare withholding.

Example: FICA on a $5,000 Bonus

For a $5,000 bonus, the engine-derived employee FICA estimate is $383: $310 for Social Security plus $73 for Medicare. This example assumes the employee remains below the Social Security wage base and Additional Medicare threshold.

State Withholding and Retirement Elections

State bonus withholding varies. Some states use a supplemental method, while others use their regular withholding method. An eligible retirement-plan contribution election may also affect how much of a bonus reaches your bank account. Check your plan rules and payroll settings before the payment date.

Why a Bonus Can Feel More Heavily Taxed

A bonus can feel more heavily taxed because withholding is collected immediately and may use a different method than your regular check. Withholding is a prepayment, not a separate final tax. Your actual liability depends on your full-year income and return.

Why bonuses look heavily taxed

Bonus payments are often subject to supplemental wage withholding methods that use a flat federal rate or aggregate method depending on employer payroll system settings. A large single-check withholding amount does not mean your bonus is taxed at that rate for the full year — annual return reconciliation applies credits and brackets to total income.

Supplemental vs aggregate methods

IRS Publication 15-T allows employers to withhold on supplemental wages using a flat rate method or by combining supplemental and regular wages in the aggregate method. The method your employer chooses affects per-check withholding on bonus payments.

State tax on bonuses

States generally tax bonus wages as ordinary income, but withholding tables and supplemental rules vary. Some states require supplemental withholding rates on bonuses; others apply regular wage tables. Check your state in the calculator when modeling a bonus check.

FICA on bonuses

Social Security (6.2% up to the wage base) and Medicare (1.45%) apply to bonus payments as part of gross wages. FICA is separate from income tax withholding lines on your stub.

Planning for net bonus

Use the bonus tax calculator to estimate net pay on a supplemental payment. See why bonuses look heavily taxed for engine-computed examples.

Related content

Bonus vs salary tax difference, paycheck withholding guide, and RSU tax guide cover related compensation types.

Net vs gross bonus planning

Budget from net bonus amount after withholding rather than gross. Employers may withhold at supplemental rates that exceed your effective annual rate — but over-withholding on bonuses often produces a larger refund at filing rather than representing final tax cost.

Timing bonus with wage base limits

If a bonus pushes year-to-date wages above the Social Security wage base, the bonus check may show reduced or zero Social Security withholding on the portion above the cap. Medicare continues on all wages regardless of base limits.

Equity and signing bonuses

Signing bonuses and equity cash components follow the same supplemental withholding framework as performance bonuses. RSU vesting may use different employer payroll coding — verify line items on your actual stub against calculator estimates.

Quick planning checklist

Confirm filing status and pay frequency match your actual pay stub before comparing to calculator output. Add pre-tax 401(k) and HSA elections if you contribute — default examples assume none. Use state paycheck calculators and methodology for source-backed assumptions. Figures are planning estimates, not tax advice.

Frequently Asked Questions

Figures and methods are based on official-source data encoded in the calculator. Not tax advice. Review the methodology and consult a qualified professional for your situation.