Bonus Tax Withholding 2026 Calculator (22% vs 37%)
Calculate your 2026 bonus tax withholding under both the flat-rate method (22% under $1M / 37% over) and the aggregate method, plus state withholding and take-home. Based on IRS Publication 15 supplemental wage rules.
| Method | Federal Withheld | Effective Rate | Take-Home |
|---|
| Bonus amount | — |
| Federal income tax withheld (employer method) | — |
| Social Security 6.2% (up to 2026 wage base $176,100) | — |
| Medicare 1.45% (+ 0.9% over $200K YTD) | — |
| State income tax withheld | — |
| Total withheld | — |
| Take-home bonus | — |
Bonuses, commissions, severance, back pay, and stock awards are "supplemental wages" under IRS Pub 15. Employers use one of two withholding methods: flat rate (22% on the first $1M of YTD supplemental wages, then 37% above $1M) or aggregate (combine bonus with most recent regular paycheck and use W-4 tables). The flat method usually withholds more for low-bracket employees and less for high-bracket employees — a difference of $500-$5,000+ on a $10K bonus.
How the 22% / 37% Flat Rate Works
If your employer pays the bonus as a separate check (or identifies it separately on the same check), they MAY use the flat method: 22% federal withholding on bonus amounts up to $1,000,000 cumulative YTD supplemental wages, then 37% mandatory on every dollar above $1M (IRS Pub 15 Section 7). The 37% rule is NOT optional — even if your marginal bracket is lower, the IRS requires 37% withholding once you cross $1M. Most W-2 employees never hit this — $1M YTD bonus is the threshold, not regular salary.
Aggregate vs Flat: Which Is Better for You
The aggregate method combines your bonus with your most recent regular paycheck and runs the total through W-4 withholding tables. Higher earners (>$190K marginal) benefit from flat 22% (under their bracket). Lower earners (<$50K) often benefit from aggregate (which uses 12%-22% brackets). Note: this is just WITHHOLDING — your actual tax owed is determined on Form 1040 at year-end. Over-withholding = refund. Under-withholding = balance due + possible underpayment penalty. Adjust quarterly via W-4 line 4(c) extra withholding if needed.
FICA Still Applies to Bonuses
Don't forget: Social Security 6.2% applies to the first $176,100 in 2026 wages (per SSA), then drops to 0%. Medicare 1.45% applies to all wages. Additional Medicare 0.9% kicks in once YTD wages exceed $200K (single) or $250K (MFJ). State income tax withholding varies — most use a flat supplemental rate (CA 10.23% on bonuses, NY 11.7%, NJ 0%-11%), some apply normal W-4 tables. Check your state DOR's supplemental wage rate.
How To Reduce Bonus Withholding (Legally)
(1) Defer the bonus. If your employer offers deferred comp (NQDC) or 401(k) bonus deferral, route some/all into pre-tax retirement — reduces federal and state withholding immediately. (2) Max HSA contribution. HSA deferrals reduce taxable supplemental wages. (3) Submit revised W-4. Use line 4(b) deductions to lower withholding if you have large itemized deductions. (4) Time the bonus. If you'll have a lower-income year (sabbatical, parental leave), pushing the bonus into that year lowers your marginal rate. (5) Charitable bunching. Pair bonus year with a large donor-advised fund contribution.
Last updated May 2026. Sources: IRS Publication 15 (Section 7) cited in tool output.