Your employer withholds from a bonus at a flat rate that has nothing to do with your tax bracket. This shows what was taken, what you actually owe, and which way the difference goes.
| Bonus | — |
| Federal withholdingFlat 22% supplemental rate | — |
| Social Security6.2% | — |
| Medicare1.45% | — |
| State | — |
This is the whole answer to why your bonus arrived so much smaller than you expected, and almost nobody explains it clearly.
The IRS classifies bonuses as supplemental wages. Employers may withhold from them at a flat 22% rather than running them through your W-4 — and most do, because it is simpler. On top of that come Social Security at 6.2%, Medicare at 1.45%, and state withholding. A bonus can easily arrive around 30% to 40% lighter than the headline figure.
But 22% is a withholding rate, not a tax rate. Your actual liability on the bonus is whatever your marginal rate is. If you are in the 12% bracket, the employer withheld nearly twice what you owe and the excess comes back at filing. If you are in the 32% bracket, they withheld too little and you will owe the balance.
Below roughly $60,000 of taxable income for a single filer, the 22% flat rate exceeds your marginal rate, so bonuses are systematically over-withheld and you get money back.
Between about $60,000 and $105,700 you are in the 22% bracket, so the flat rate happens to match and the difference is close to zero.
Above that, your marginal rate is 24% or higher while withholding stays at 22%, so you are under-withheld and should set something aside. The gap widens as income rises — a high earner in the 37% bracket is short by 15 percentage points on the entire bonus.
Note also that once a bonus takes you above the Social Security wage base of $184,500, no further Social Security is withheld, which makes a large bonus look more lightly taxed than it is.
Aggregate supplemental wages above $1,000,000 in a calendar year are withheld at 37% rather than 22%, and employers have no discretion on this — the mandatory flat rate applies to the portion above the threshold.
The threshold is cumulative across the year and across all supplemental payments, not per bonus. Two $600,000 bonuses trigger it on the second.
The aggregate method is the alternative. Rather than the flat rate, your employer can combine the bonus with your regular wages and withhold based on your W-4 as though it were a single larger paycheck. That usually lands closer to your true liability. Not every payroll department will accommodate the request, but it costs nothing to ask.
Directing part of the bonus into a traditional 401(k) or HSA reduces the income tax withheld, though 401(k) contributions do not reduce the Social Security and Medicare portions.
If your bonus is consistently over-withheld, adjusting your W-4 to reduce withholding on regular paychecks recovers the money through the year rather than waiting for a refund.
It was withheld, not taxed, at 22% federal plus 6.2% Social Security, 1.45% Medicare and state withholding. Your actual liability is your marginal rate, and the difference resolves when you file.
If your marginal rate is below 22%, yes — the over-withheld amount comes back as part of your refund. If it is above 22%, you were under-withheld and will owe the balance.
Yes. The aggregate method combines the bonus with regular wages and applies your W-4, which usually tracks your real liability more closely. Whether payroll will do it is up to them.
No. It is ordinary income subject to the same rates. Only the withholding method differs.