How Are Bonuses Taxed?
Bonuses are taxed like regular pay, but withheld differently: usually a flat 22% for federal income tax, plus 7.65% for Social Security and Medicare. Whether that’s too much or too little depends on your tax bracket.
By Bogdan · Updated
A bonus feels like free money — until you see how much was taken out. The good news: bonuses aren’t taxed at a special rate, and some of what’s withheld may come back.
Explain it like I’m 5
Imagine every time you earn coins, a grown-up puts some in a “tax jar” before handing you the rest. For a bonus, the grown-up doesn’t stop to count exactly — they just drop 22 coins of every 100 in the jar, plus about 8 more for Social Security and Medicare.
At the end of the year, someone counts carefully. If the jar has more than you really owed, you get coins back. If it has less, you add a few.
See your own bonus take-home and whether you’ll get some back with the bonus tax calculator.
What comes out of a bonus
| Tax | Rate | On a $10,000 bonus |
|---|---|---|
| Federal income tax withholding | 22% | $2,200 |
| Social Security | 6.2% (until pay hits $184,500 in 2026) | $620 |
| Medicare | 1.45% (+0.9% on pay over $200,000) | $145 |
| State tax | Varies — many states use a flat bonus rate | — |
| Take-home (no state tax) | $7,035 |
Supplemental wages over $1 million in a year are withheld at 37%.
Two ways employers withhold
- Percentage method: the bonus is paid separately, with a flat 22% withheld. Predictable.
- Aggregate method: the bonus is added to a regular paycheck and taxed as if that big paycheck were normal — which can withhold a lot more. The extra comes back at tax time.
Withheld vs. what you actually owe
The real tax on your bonus is your top tax bracket on those dollars:
| Your situation (single, 2026) | Real rate on the bonus | 22% withholding is… |
|---|---|---|
| $35,000 salary, $5,000 bonus | 12% | Too much — about $500 back |
| $80,000 salary, $10,000 bonus | 22% | About right |
| $250,000 salary, $20,000 bonus | 32% | Too little — about $2,000 more to pay |
Remember: a bonus only pushes the extra dollars into a higher bracket, never your whole income. See capital gains tax explained for how brackets stack.
How to keep more of your bonus
- Put some into your 401(k) if your plan allows deferrals from bonuses. It cuts income tax (not Social Security and Medicare).
- Fund an HSA through payroll if you have one.
- High earners: set aside the gap between 22% and your bracket, or adjust your W-4, to avoid a surprise bill.
- Plan the timing if you can — a bonus paid in January lands in the next tax year.
Wondering what your raise or bonus means per hour? Try the salary to hourly calculator.
Frequently asked questions
Are bonuses taxed at a higher rate?
No. Bonuses are ordinary income, taxed at the same rates as your salary. They can feel more heavily taxed because employers often withhold a flat 22% — or more under the aggregate method — but the real tax is worked out on your tax return.
What percentage is taken out of a bonus?
Typically 22% federal income tax, 6.2% Social Security and 1.45% Medicare — 29.65% in total — plus any state tax. On a $10,000 bonus with no state tax, you’d take home about $7,035.
Why was so much taken out of my bonus?
Your employer probably used the aggregate method: the bonus was added to a regular paycheck and tax was withheld as if you earned that much every pay period. That temporarily pushes withholding up. If it’s more than you owe, you get the extra back when you file.
Do I get bonus tax back?
If your real top federal bracket is 10% or 12%, the 22% withholding is more than you owe, and the difference comes back in your refund. If you’re in the 22% bracket, it roughly matches. At 24% or higher, you may owe a little more at tax time.
Is a bonus taxed at 40%?
Not as a rule. Total withholding can approach 40% with state tax or the aggregate method, but your actual federal rate on the bonus is your top bracket — which could be anything from 10% to 37%.
This article is for general education and is not financial, investment or tax advice. Rates, rules and limits change; check current terms with your bank or the IRS. See our disclaimer.