The federal bonus tax rate is a flat 22% withholding for most employees in 2026, rising to 37% on supplemental wages above $1 million in a year. But that 22% is only what your employer holds back. Your bonus is ordinary income, so the tax you finally owe on it depends on your marginal tax bracket, and you settle the difference when you file your return.
How the bonus tax rate works
The IRS treats bonuses, commissions and similar payments as supplemental wages. According to IRS Publication 15 (2026), employers can withhold federal income tax on them in one of two ways:
- Percentage method: a flat 22% on the bonus, when it is paid separately or identified separately from regular wages. This is the most common method.
- Aggregate method: the bonus is added to a regular paycheck and withholding is calculated on the total as if you earned that much every period. This often withholds more than 22%.
- Above $1 million: any supplemental wages over $1 million in the calendar year must be withheld at 37%.
On top of income tax, Social Security (6.2%) and Medicare (1.45%) apply to bonuses just like regular pay, and most states with an income tax also withhold.
Worked example: a $5,000 bonus on a $70,000 salary
A single employee in Texas earning $70,000 receives a $5,000 bonus:
| Step | Amount |
|---|---|
| Bonus | $5,000 |
| Federal withholding at 22% | -$1,100 |
| Social Security and Medicare | -$383 |
| Bonus in your paycheck | $3,518 |
| Real extra federal tax on the bonus | $1,100 |
| Bonus you really keep for the year | $3,518 |
At $70,000, the bonus falls in the 22% bracket, so 22% withholding is close to the real tax. The comparison changes at other incomes.
Withheld vs real tax at different salaries
| Salary | Withheld on $5,000 (22%) | Real federal tax on the bonus | At filing time |
|---|---|---|---|
| $40,000 | $1,100 | $600 | Refund of about $500 |
| $70,000 | $1,100 | $1,100 | About even |
| $100,000 | $1,100 | $1,100 | About even |
| $150,000 | $1,100 | $1,200 | Owe about $100 |
| $250,000 | $1,100 | $1,600 | Owe about $500 |
Single filer in Texas, 2026 brackets, standard deduction. The real tax is the difference in federal income tax with and without the bonus.
- Lower earners (12% bracket) are over-withheld and usually get the difference back as part of their refund.
- Higher earners (24% bracket and above) are under-withheld and may owe at tax time. Adding extra withholding on your W-4 can avoid a surprise.
State taxes on bonuses
The federal bonus tax rate is only part of the story. In states with an income tax, your employer also withholds state tax on the bonus. Some states publish their own flat supplemental rate, while others use the regular withholding tables. In Texas, Florida and the other states without a wage tax, nothing is withheld for the state. As with federal tax, state withholding is a prepayment: the final amount depends on your state brackets when you file.
In California, for example, the same $5,000 bonus on $70,000 adds $400 of state income tax and $65 of State Disability Insurance over the year.
Bonus or raise: which is taxed less?
Neither. A $5,000 bonus and a $5,000 raise spread over the year produce exactly the same tax on your return. The only difference is timing: the bonus is withheld at a flat rate in one paycheck, while a raise is withheld gradually through the regular tables. A raise also usually counts toward future raises and retirement contributions, which a one-off bonus does not.
Legal ways to keep more of a bonus
- Defer it into your 401(k) if your plan allows contributions from bonuses, within the annual limit.
- Fund an HSA through payroll if you have a high-deductible health plan.
- Adjust Step 4(c) of your W-4 if you expect to be under-withheld, so you do not owe a lump sum in April.
- Check the pay stub to see which withholding method your employer used.
Common bonus tax rate mistakes
- Thinking the bonus pushes all your income into a higher bracket. Only the dollars above each threshold are taxed at the higher rate. See effective vs marginal tax rate.
- Treating withholding as the final tax. The bonus tax rate of 22% is a prepayment, reconciled on your Form 1040.
- Forgetting the 401(k). If your plan allows deferrals from bonuses, the deferred part avoids federal income tax withholding.
The takeaway
Bonuses are not taxed more than salary; they are simply withheld at a flat 22% rate. Whether you get money back depends on your bracket. To see your real numbers, compare your salary with and without the bonus in the salary after tax calculator. If your bonus made your paycheck smaller than you expected, read why your paycheck is lower than expected.
Frequently asked questions
What is the federal bonus tax rate in 2026?
Employers can withhold a flat 22% federal income tax on supplemental wages such as bonuses. Supplemental wages above $1 million in a year must be withheld at 37%.
Are bonuses taxed more than regular pay?
No. A bonus is ordinary income, taxed at the same rates as your salary when you file. Only the withholding method is different.
How much of a $5,000 bonus will I take home?
With 22% federal withholding and FICA, about $3,518 in a state without income tax, before any state withholding or 401(k) deferral.
Do I get bonus tax back?
If your marginal federal rate is below 22%, the extra withholding usually comes back as part of your refund.
Estimates for information only, not tax advice.
