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Bonus Tax Withholding Calculator
IRS flat-rate vs. aggregate withholding on a bonus.
Two ways the IRS lets employers withhold on a bonus
Bonuses, along with severance and commissions, are "supplemental wages" under IRS rules. Employers can withhold federal tax on them one of two ways: the flat rate method (22% on the first $1 million of supplemental wages in a calendar year, 37% on anything above that), or the aggregate method, which folds the bonus into your next regular paycheck and withholds as if that combined amount were your normal pay — often pushing more of it into a higher withholding bracket temporarily.
Withholding is not your final tax bill
Whichever method your employer uses, that's just money set aside toward your taxes for the year — not the actual tax you owe on the bonus. Your real liability depends on your total income, deductions and credits for the whole year, and gets reconciled when you file. A lot of people see a big chunk withheld from a bonus and assume it's taxed at a punishing special rate — it isn't; it usually evens out (or comes back as a refund) at filing time.
Not tax advice. Figures use the 2024 federal tax year and are estimates for general education only — every situation is different. Confirm your numbers with a CPA or tax professional, and check the current year's IRS figures, before filing or making financial decisions.
Frequently asked questions
Will I actually pay 22% (or 37%) tax on my bonus?
Not necessarily — 22%/37% is just the withholding rate your employer uses, not your final tax rate. Your bonus is taxed at your normal marginal rate(s) once combined with the rest of your year's income on your tax return; withholding is reconciled then, often producing a refund of over-withheld amounts.
Why did my bonus get taxed so much more than my regular paycheck?
The flat 22% (or higher) withholding rate is often higher than the marginal rate many people actually pay, so it can feel like an extra bite. It's a withholding quirk, not a different tax on bonuses — it evens out when you file.
Can my employer choose either method?
Generally yes, within IRS rules — the flat rate method is common and simplest, especially for bonuses paid separately from a regular paycheck. The aggregate method is more common when a bonus is paid together with regular wages in the same check.
What's the $1 million threshold about?
The IRS requires 37% flat withholding on the portion of supplemental wages (bonuses, etc.) that exceeds $1 million for an employee in a calendar year — a rule mainly relevant to very large bonus payouts.