That bonus check looks smaller than expected — but it's probably not because of a higher tax rate.
Updated October 2026.
A bonus arrives, and the amount that lands in your account is noticeably smaller than the number your employer promised. It is a common and frustrating moment. It is almost always caused by how bonuses are withheld, not by a special "bonus tax", which does not exist.
The IRS treats bonuses, commissions, severance pay and other one-time payments as supplemental wages. They are taxed like any other pay when you file your return, but they have their own withholding rules. Employers generally use one of two methods.
Most employers withhold a flat 22% for federal income tax when a bonus is paid separately from regular wages. The rate is the same whatever your tax bracket. If your own top bracket is 12%, the withholding on the bonus looks high next to your regular paycheck. If your bracket is 24% or more, the 22% is actually too low.
Once an employee's supplemental wages pass $1 million in a calendar year, the amount above $1 million is withheld at 37%.
Some employers add the bonus to a regular paycheck and calculate withholding on the combined total, as if that were your normal pay for the period. The payroll formula assumes you earn that much every pay period, so it applies higher brackets than your actual annual income would reach. The result is often more withholding than the flat method would produce.
Here is the flat method for an employee in a state with no income tax:
| Item | Amount |
|---|---|
| Bonus | $5,000.00 |
| Federal income tax withheld (22%) | −$1,100.00 |
| Social Security (6.2%) | −$310.00 |
| Medicare (1.45%) | −$72.50 |
| You receive | $3,517.50 |
About 30% is gone before state tax. Most states with an income tax also withhold on bonuses, and some use their own flat rate. California, for example, withholds 10.23% on bonuses.
Neither method changes how much tax you owe for the year. Your tax is calculated once, on your return, from your total income across every paycheck and bonus. The withholding is an estimate taken in advance.
Take the same $5,000 bonus for a single filer earning $60,000. That person is in the 12% bracket, so the bonus adds $600 to the year's federal income tax. Since $1,100 was withheld, the extra $500 comes back in the refund. For someone earning $110,000, the bonus falls in the 22% bracket and the $1,100 withheld is exactly the tax owed. Above that, in the 24% bracket and higher, the flat rate under-withholds and a little more is due at filing.
Social Security and Medicare are different. Those amounts are the final tax and are not refunded, with one exception: if your wages for the year have already passed the $184,500 Social Security wage base, no Social Security tax comes out of the bonus at all.
If a bonus needs to land on a specific amount after withholding, you work backward with a gross-up calculation. To receive $5,000 after 22% federal withholding and 7.65% for Social Security and Medicare, the gross bonus has to be about $7,107. Employers use the same calculation when they promise a "net" bonus. The Gross-Up Calculator does it for regular pay.
Sources: IRS Publication 15, Employer's Tax Guide (supplemental wages); IRS Publication 15-T, Federal Income Tax Withholding Methods.