2026 tax guide
Bonus Tax Rate Explained: 2026 Withholding Rules
A bonus is not taxed under a separate final tax bracket. For 2026 payroll withholding, an employer may withhold federal income tax at a flat 22% on separately identified supplemental wages up to $1 million; supplemental wages above $1 million from the employer during the year are withheld at 37%.
2026 supplemental wage withholding
The percentage method is an employer withholding method, not a promise about the employee's final liability. Under the aggregate method, payroll combines the bonus with regular wages for a payroll-period calculation and subtracts withholding already assigned to regular wages. That can produce a withholding amount above or below 22% depending on pay frequency and Form W-4 information.
| Situation | Federal income-tax withholding |
|---|---|
| Separately identified bonus, regular wages previously withheld | Flat 22% or aggregate method |
| Bonus combined with regular pay and not identified separately | Regular payroll withholding on the combined payment |
| Supplemental wages above $1 million for the year | 37% on the excess |
Why the withholding can differ from the final tax
A bonus is included with other wages on Form W-2 and taxed through the same progressive income-tax system as salary. If the employee's marginal rate is higher than 22%, flat withholding may be too low. If the marginal rate is lower, it may be too high. Credits, deductions, a spouse's income, other jobs, investment income, and prior payments determine whether the return ultimately shows a refund or balance due.
A $10,000 separately paid bonus using the 22% method has $2,200 of federal income tax withheld. That is before employee Social Security and Medicare taxes, state income-tax withholding, and any local payroll tax. The net check can therefore be materially lower than $7,800 even though the federal supplemental rate is 22%.
Payroll taxes and planning steps
Ask payroll which method will be used and whether the payment is being treated as supplemental wages. A paystub should separate gross bonus, federal income-tax withholding, FICA taxes, state withholding, and benefit deductions. When timing is flexible, compare the projected full-year tax for each year rather than focusing only on the withholding percentage shown on one check.
- Social Security and Medicare taxes generally continue to apply to taxable bonus wages under their own rules and limits.
- Additional Medicare Tax withholding can apply after an employer pays more than the statutory wage threshold, regardless of filing status.
- State supplemental-wage withholding methods vary and are separate from the federal 22% method.
- Use a full-year projection after a large bonus and adjust Form W-4 or estimated payments when projected payments are short.
Related calculators and guides
Frequently asked questions
Are bonuses taxed at 22% in 2026?
Employers may use 22% federal income-tax withholding for qualifying separately identified supplemental wages up to $1 million. Final income tax is determined on the annual return.
Why was more than 22% removed from my bonus?
Social Security, Medicare, state or local tax, benefit deductions, or the aggregate federal method can push total deductions above 22%.
When does the 37% bonus rate apply?
It applies to the portion of supplemental wages paid by the employer that exceeds $1 million during the calendar year.
Can I change withholding after a bonus?
You can review a full-year projection and submit a new Form W-4 or make an estimated payment, subject to payroll timing and applicable rules.
Primary and methodology sources
- IRS Publication 15 (2026), section 7 Supplemental Wages
- IRS Publication 15-T
- IRS Tax Withholding Estimator
Educational planning information only. Official forms, instructions, assessors, and tax agencies control your filed return or tax bill.