Bonus Tax Withholding: 22% Flat vs Aggregate Method (2026)

You worked hard for that bonus — then the check arrives and it’s much smaller than expected. Welcome to supplemental wage withholding.

Bonuses aren’t taxed at a special punishing rate. But the withholding method can make them look that way. Here’s exactly how it works.

Use our Paycheck Calculator to estimate your after-tax bonus.

What Are Supplemental Wages?

The IRS classifies bonuses, commissions, overtime paid separately, severance pay, and other non-regular compensation as supplemental wages. For supplemental wages under $1 million per year, employers have two withholding options.

Method 1: The 22% Flat Rate (Most Common)

The percentage method applies a flat 22% federal withholding to supplemental wages paid separately from a regular paycheck.

Your bonus check withholding breakdown (22% flat method):

Deduction	Rate	On $5,000 Bonus
Federal income tax	22% flat	$1,100
Social Security	6.2%	$310
Medicare	1.45%	$72.50
Total federal + FICA	~29.65%	$1,482.50
State income tax	varies	varies

A $5,000 bonus in California (9.3% state rate example): withhold roughly $1,482.50 + $465 state = ~$1,947 total → take home ~$3,053.

Why the flat rate often over-withholds

If you’re in the 12% bracket (income $11,926–$48,475 for single filers), your actual federal rate on the bonus should be 12% — not 22%. The flat 22% withholding overtaxes you by 10 percentage points. You get it back as a refund when you file.

If you’re in the 32% or higher bracket, the 22% flat rate under-withholds and you’ll owe more at filing.

Method 2: The Aggregate Method

With the aggregate method, your employer adds the bonus to your most recent regular paycheck, calculates withholding on the combined amount, then subtracts the withholding already taken from your regular paycheck. The difference is withheld from the bonus.

Example:

• Regular monthly paycheck: $4,000 → employer withholds $440 (22% bracket)
• Bonus month: $4,000 regular + $5,000 bonus = $9,000 combined
• Annualized $9,000/month = $108,000 → 24% bracket
• Withholding on $9,000 at 24% = $2,160 → minus $440 already withheld = $1,720 withheld from bonus

The aggregate method more closely tracks your actual tax bracket but often results in more withholding than the flat method if your combined paycheck pushes into a higher bracket.

Which Method Does Your Employer Use?

Most employers use the 22% flat rate because it’s simpler. The aggregate method requires payroll calculations tied to each employee’s regular pay schedule.

Your pay stub or bonus confirmation letter may specify the method. If not, check whether your bonus was issued as a separate check (usually flat 22%) or added to a regular paycheck (likely aggregate).

The Real Tax on Your Bonus

Withholding ≠ actual tax owed. Your bonus is ordinary income. At year-end, the IRS recalculates your total income and the correct tax. The withholding is just an estimate.

Scenario: $75,000 salary + $5,000 bonus (single filer)

• Total income: $80,000 → 22% bracket throughout
• Flat 22% withholding on bonus matches actual bracket → no adjustment needed at filing

Scenario: $45,000 salary + $5,000 bonus (single filer)

• Total income: $50,000 → 22% bracket
• Flat 22% withheld → correct
• But regular salary was partially in the 12% bracket, so effective rate is lower → likely a small refund

Supplemental Wages Over $1 Million

If you receive over $1 million in supplemental wages from a single employer in one year (a rare but real situation), the IRS mandates 37% withholding on the amount above $1 million — not the 22% flat rate.

What You Can Do

• Check your withholding: After receiving a bonus, run the IRS Tax Withholding Estimator to see if you’ll owe or get a refund
• Increase W-4 withholding temporarily if you expect to owe (add extra per-paycheck withholding in Step 4c)
• Make an estimated tax payment (Form 1040-ES) to avoid underpayment penalties if your bonus pushes you significantly above what was withheld