How Is My Bonus Taxed? (2026)

Your bonus is taxed as ordinary income, but a big chunk is usually withheld up front because the IRS treats bonuses as “supplemental wages.” The most common result is that 22% is withheld for federal tax before you see the money, on top of Social Security, Medicare, and state tax. That feels like a lot, but it is withholding, not your final tax bill, and it often evens out when you file.

The two ways employers withhold on a bonus

Method	How it works
Percentage (flat-rate)	A flat 22% is withheld federally (rising to 37% on any amount over $1 million in a year). Most common for separate bonus checks.
Aggregate	The bonus is added to your regular paycheck and withheld at your normal rate from the combined total. This can withhold even more.

On top of the federal withholding, every bonus also has:

• Social Security: 6.2% (up to the $184,500 wage base in 2026)
• Medicare: 1.45% (plus 0.9% on wages over $200,000)
• State income tax: varies by state

So a $5,000 bonus in a typical state might have roughly $1,100 federal + $383 FICA + state withheld, leaving you around $3,200 to $3,400.

Why it is not as bad as it looks

The 22% is just an estimated prepayment. When you file your return, the bonus is added to your other income and taxed at your actual marginal rate:

• If your real rate is below 22%, too much was withheld and you get the difference back as a refund.
• If your real rate is above 22%, not enough was withheld and you will owe a little.

In other words, a bonus is not taxed at a special high rate, it is taxed like all your other income. The 22% just controls timing, not the final amount.

How to keep more of a bonus

• Defer it into a 401(k) or HSA. Routing some or all of a bonus into pre-tax retirement or health savings lowers the taxable amount.
• Check the withholding method. If the aggregate method over-withheld, you will recover it at filing.
• Adjust your W-4 if a year-end bonus regularly leaves you with a large refund or balance due.

Bottom line

• Bonuses are supplemental wages, usually withheld at a flat 22% federal (37% over $1M), plus FICA and state.
• That 22% is withholding, not your real tax, it trues up at filing based on your actual bracket.
• Pre-tax 401(k) or HSA contributions are the cleanest way to reduce the tax on a bonus.

See your full paycheck math, including a bonus, with our take-home pay calculator. This article is general information, not tax advice.