Bonus Tax Calculator (Supplemental Wages)
Estimate federal, state, and FICA tax on your bonus. Compare the IRS flat 22% supplemental wage method against the aggregate method to see which leaves more money in your pocket for 2026.
How Bonus Tax Works in 2026
The IRS classifies bonuses, commissions, overtime, and severance as "supplemental wages." Employers can withhold federal tax two ways. The flat percentage method applies a flat 22% to your bonus when it is paid on a separate check — this is what most employers use because it is simple. Bonuses over $1 million are withheld at 37% on the amount above $1M. The aggregate method adds the bonus to your most recent regular paycheck, calculates withholding on the combined amount using IRS tables, then subtracts what was already withheld. Your actual tax owed at filing depends on your total annual income, not the withholding method — if too much was withheld you get a refund, if too little you owe.
Flat 22% vs Aggregate Method
The flat 22% method is often better for higher earners already in the 24%, 32%, or 35% bracket because withholding is capped at 22%. The aggregate method is usually better for low-to-mid earners in the 10% or 12% bracket because it withholds at their lower marginal rate. For someone earning $50,000 with a $5,000 bonus, aggregate method withholds roughly $600 in federal tax while flat method withholds $1,100 — a $500 paycheck difference, though both result in the same tax owed at year-end. This calculator shows both methods side-by-side so you can verify your employer chose the better option or plan for a refund.
FICA, State Tax, and Pre-Tax Bonus Deductions
Regardless of withholding method, bonuses are always subject to Social Security (6.2% up to $176,100 wage base for 2025/2026) and Medicare (1.45% on all wages, plus 0.9% Additional Medicare Tax above $200,000). State income tax also applies based on your state's rate — nine states charge 0% while California's top rate reaches 13.3%. You can reduce bonus tax by routing some of it pre-tax: 401(k) contributions lower federal and state tax (but not FICA), and HSA contributions lower federal, state, AND FICA — making HSA the most tax-efficient place to send bonus money if you have a high-deductible health plan.
Bonus Planning Tips
If your bonus pushes your annual income into a higher marginal bracket, only the portion above the bracket threshold is taxed at the higher rate — your whole income does not suddenly cost more. Consider timing: a December bonus deferred into January can smooth income across tax years. Max out 401(k) or HSA contributions from the bonus if you are not already at the limit — the tax savings are immediate.
Why Your Bonus Tax Withholding Doesn't Match Your Final Tax Owed
The biggest surprise most bonus recipients hit at tax filing: the 22% flat withheld at the bonus check is not the amount actually owed. IRS Rev. Proc. 2025-32 sets the supplemental-wage flat rate at 22% for supplemental wages up to $1M and 37% above per IRS Publication 15 (Circular E). But your actual marginal rate is set by your total annual income — a $10,000 bonus at your true 32% marginal bracket means an extra $1,000 owed at tax time versus the 22% withheld. Conversely, if your true bracket is 12% (or you're getting the earned income credit), you were over-withheld and get a refund. The calculator above shows both withholding and true marginal — reconcile the two before you spend the bonus. For state adjustment, some states apply their own supplemental flat rate (California 10.23% on bonuses, New York 11.7%), which the calculator applies automatically when you pick your state.
Bonus Tax Calculator: Signing, Retention, and Year-End Bonus Scenarios
Different bonus types have subtle withholding differences the bonus tax calculator above handles automatically. A signing bonus paid upfront is treated as supplemental wages and hit with the 22% flat rate — but if you leave before the clawback period ends, the IRS lets you deduct the returned amount (Publication 525). Retention bonuses paid during employment follow the same 22% flat rule with no clawback preference. Year-end bonuses combined with your December paycheck may push you into a higher bracket for that single check, but your annual marginal rate is what matters for the final refund/owed reconciliation. Per IRS Publication 525 (Taxable and Nontaxable Income), stock-option bonuses (RSU vests, ISO exercises) count as supplemental wages at ordinary rates on the vest date — enter the RSU dollar value as the bonus amount above to see the true after-tax number before you make sell/hold decisions. For 2026, the Social Security wage base rose to $176,100 — a $30,000 bonus paid to someone already at the wage base owes 0% SS but still 1.45% Medicare + state.
Last updated 2026-07-22. Sources: IRS Publication 15, IRS Publication 525, SSA Contribution and Benefit Base.
Frequently Asked Questions
Why is my bonus taxed so high?
Your bonus is not taxed higher than regular income — it is just withheld at a higher rate. The IRS flat supplemental wage rate is 22%, which may be higher or lower than your actual marginal tax rate. Any over-withholding is refunded when you file your tax return.
Flat 22% or aggregate method — which is better?
Flat 22% is typically better if you are in the 24% or higher bracket (your withholding is capped at 22%). Aggregate is better for 10% or 12% bracket earners because it uses your actual lower marginal rate. Either way, your final tax owed at filing is the same.
Do I pay FICA (Social Security and Medicare) on bonuses?
Yes. Bonuses are always subject to 6.2% Social Security (up to the $176,100 wage base) and 1.45% Medicare. High earners over $200,000 also pay a 0.9% Additional Medicare Tax.
How can I reduce tax on my bonus?
Route some or all of your bonus into a 401(k), HSA, or FSA pre-tax. HSA is the most tax-efficient because it reduces federal, state, AND FICA taxes. 401(k) reduces federal and state but not FICA. Traditional IRA contributions can also offset bonus income at tax time.
What if my bonus is over $1 million?
Bonuses above $1 million in a calendar year are subject to mandatory 37% federal withholding on the amount above $1M (the flat 22% only applies to the first $1M). This is IRS required and employers cannot opt out.
Does a bonus push me into a higher tax bracket?
Only the portion of income above the bracket threshold is taxed at the higher rate — not your whole income. A bonus can cross you into a new bracket, but your existing income keeps its original lower rates (progressive taxation).
Why does the withheld tax on my bonus not match what I actually owe?
The 22% flat rate is a withholding shortcut, not your actual tax rate. Your true tax on the bonus is set by your total annual income and marginal bracket. If your bracket is 32%, a $10,000 bonus owes ~$3,200 federal at filing but only $2,200 was withheld — you owe the $1,000 difference. If your bracket is 12%, you were over-withheld and refunded the excess. Reconcile before you spend the bonus.
Do states apply their own bonus withholding rate?
Most states default to withholding at the standard state income tax rate. Some apply a specific supplemental flat: California uses 10.23% for most bonuses (13.8% for stock options), New York uses 11.7%, Vermont 30% of federal supplemental. The calculator above applies the correct state supplemental rate automatically when you select your state.
How does the bonus tax calculator handle signing bonus clawback?
If you leave before the clawback period and repay a signing bonus, IRS Publication 525 lets you deduct the returned amount on Schedule A (if over $3,000) or take a Section 1341 tax credit for the year of repayment. The 22% withheld at receipt is not automatically refunded — you must claim it as an adjustment on your amended return. The calculator above shows only initial withholding; consult a CPA before agreeing to any clawback repayment structure.
What is the bonus tax rate for RSUs and stock options in 2026?
RSU vests and NQSO exercises are treated as supplemental wages at ordinary income rates — the 22% flat federal withholding applies on the vest-day dollar value. California adds an extra 10.23% supplemental (13.8% for ISO). If your RSU vests $50,000 in 2026, federal withholding is $11,000 (22%) + FICA 7.65% + state — but at a 32% true marginal bracket, you owe another $5,000 at filing. Enter the RSU dollar value as the bonus amount above to see the reconciliation before you decide sell-to-cover vs sell-all.