Why Is My Bonus Taxed at 22%? (2026)
You earned a $10,000 bonus and the deposit is $7,000-ish. Your salary never gets haircut like that, so the bonus feels punished. It isn't — but bonuses live under different withholding rules than regular wages, and the 22% flat rate is the reason the number looks so harsh.
Bonuses are "supplemental wages"
The IRS puts bonuses in a bucket called supplemental wages, alongside commissions, severance, overtime premiums, and back pay. For regular salary, your employer withholds using the bracket tables and your W-4. For supplemental wages, the IRS offers employers a shortcut: withhold a flat 22% for federal income tax on the first $1 million of supplemental wages paid in a calendar year, and 37% on anything above $1 million (IRS Publication 15, 2026 — unchanged from prior years).
Employers can instead use the "aggregate method" (lump the bonus with your regular pay and run the normal tables), but almost none do — the flat 22% is simpler and roughly right for most earners. So 22% is what you see.
Two things people get wrong:
It's withholding, not your tax rate. The 22% is your employer's estimate, paid to the IRS on your behalf during the year. Your actual federal tax on that bonus is whatever your marginal bracket says when you file Form 1040. If your marginal rate is 12%, the bonus really costs you ~12% in federal tax — and the extra ~10% withheld comes back as a refund. If you're in the 32% bracket, you might owe a little more in April. The two numbers settle up once a year, always.
FICA doesn't care about the 22%. Social Security (6.2% up to the 2026 wage base of $184,500) and Medicare (1.45%, no cap) apply to bonus dollars exactly like salary dollars. That 7.65% comes off regardless of the federal withholding method.
Worked example: an $8,000 bonus
Single filer, under the Social Security wage base, no state tax (add your state's cut on top):
| Step | Calculation | Result |
|---|---|---|
| Gross bonus | — | $8,000.00 |
| Federal withholding | $8,000 × 22% | −$1,760.00 |
| Social Security | $8,000 × 6.2% | −$496.00 |
| Medicare | $8,000 × 1.45% | −$116.00 |
| You keep (before state tax) | $8,000 − $2,372 | $5,628.00 |
Now the April reconciliation. Suppose your marginal federal bracket is 12%. Your actual federal tax on that $8,000 is about $8,000 × 12% = $960 — but $1,760 was withheld. The $800 difference comes back to you as a refund (or shrinks what you owe). The withholding looked punitive; the real math wasn't.
Flip it: if you're in the 32% bracket, actual tax is ~$2,560 vs. $1,760 withheld — you'd owe about $800 more at filing. Either way, the 22% was just a down payment.
The $1 million threshold (rare, but real)
On supplemental wages above $1 million in a year, withholding jumps to a flat 37%. This mostly matters for executives with large payouts. Our Bonus Tax Calculator models the threshold automatically.
State tax: the wild card
States treat bonuses inconsistently — some apply the same flat supplemental rate as regular withholding, some have a separate bonus rate, and nine states (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming) take nothing at all. California, for example, withholds a flat 10.23% on bonuses and stock options (6.6% on other supplemental wages like commissions and severance, per EDD publication DE 231PS); New York uses its own supplemental tables. Check your state's rule or just run the Bonus Tax Calculator — it covers state bonus treatment where tables are published.
Can you change the 22%?
Not directly — the supplemental flat rate is your employer's choice of IRS-approved method. But you can adjust your overall withholding via Form W-4 (Step 4c, extra withholding per paycheck) to compensate if bonuses consistently over- or under-withhold for you. See our W-4 guide for how.
FAQ
Is my bonus actually taxed more than my salary? No. Your bonus is taxed at your normal marginal rate like everything else. Only the withholding is different (flat 22%), which is why the paycheck looks worse than the reality.
Why 22% specifically? It's the IRS's chosen simplified rate for supplemental wages — close to the marginal rate of a typical earner, simple for payroll systems. It hasn't changed in years (IRS Publication 15, 2026).
Does the 22% apply to commissions and severance too? Yes — anything classified as supplemental wages: bonuses, commissions, severance pay, overtime premiums, retroactive pay increases. Same 22% flat withholding rule.
What if my bonus pushes me into a higher bracket? Brackets apply to total annual income, so a large bonus can push some dollars into the next bracket — but only the dollars above the threshold are taxed at the higher rate. That's true whether the money came as salary or bonus.
Should I be happy or sad about a big withholding number? Neutral. Over-withholding is an interest-free loan to the government; under-withholding risks an April bill. What matters is the total at filing, not any single paycheck.
Data sources
- IRS Publication 15 (2026): supplemental wage withholding — flat 22% to $1M, 37% above; aggregate method alternative.
- SSA (2026): Social Security wage base $184,500; 6.2% / 1.45% FICA rates.
- State bonus withholding rules vary by state; nine no-wage-tax states listed per Tax Foundation 2026 tables (as of January 2026).
Estimates only, not tax advice.