How Bonuses Are Taxed
Bonuses are taxed with 4 withholdings: federal income tax, Social Security, Medicare and state income tax. IRS Publication 15 gives employers 2 federal methods.
Percentage method (22%)
The percentage method withholds a flat 22% of the bonus when it is paid separately from regular wages. Supplemental wages above $1,000,000 in a calendar year are withheld at 37%.
Aggregate method
The aggregate method adds the bonus to a regular paycheck, withholds on the total as one large paycheck, and subtracts the withholding already due on the regular pay. The result is often higher than 22% for a large bonus.
Bonus Tax Examples
| Bonus | Federal (22%) | FICA (7.65%) | Take-home |
|---|---|---|---|
| $1,000 | $220 | $76.50 | $703.50 |
| $2,500 | $550 | $191.25 | $1,758.75 |
| $5,000 | $1,100 | $382.50 | $3,517.50 |
| $10,000 | $2,200 | $765 | $7,035 |
| $25,000 | $5,500 | $1,912.50 | $17,587.50 |
The examples use a state with no income tax. California withholds 10.23% on bonuses and other supplemental wages, so the same $5,000 bonus keeps less there.
Bonus Withholding vs the Tax You Owe
Bonus withholding is a prepayment, not the final tax. The bonus joins your other wages on Form W-2, and the tax return applies the normal brackets to the total. A single filer in the 12% bracket gets part of a 22% withholding back as a refund; a filer in the 32% bracket owes more.
The Tax Refund Calculator compares the year's withholding with the tax owed.
Bonus Tax Rate by State
The bonus tax rate by state is 22% federal plus 7.65% FICA plus whatever the state takes. The federal and FICA parts are identical in all 50 states; only the state line moves.
| State, $5,000 bonus | State tax | Share withheld | Take-home |
|---|---|---|---|
| Texas | $0 | 29.6% | $3,517.50 |
| Arizona | $125 | 32.1% | $3,392.50 |
| Pennsylvania | $153.50 | 32.7% | $3,364 |
| Illinois | $247.50 | 34.6% | $3,270 |
Arizona, Pennsylvania and Illinois tax wages at one flat rate (2.5%, 3.07% and 4.95%), and the table applies that rate to the bonus. Real state withholding can differ, for example where the state lets employees choose a withholding percentage. For a state not in the list, pick "Other state" and type its rate.
Aggregate Method by Pay Frequency
Under the aggregate method, the same bonus gets a different federal rate depending on the regular paycheck it rides with. The table adds a $5,000 bonus to a $2,500 regular paycheck for a single filer.
| Regular paycheck | Federal withheld | Federal rate | Bonus take-home |
|---|---|---|---|
| Weekly $2,500 | $1,532.70 | 30.7% | $3,084.80 |
| Biweekly $2,500 | $1,150.54 | 23.0% | $3,466.96 |
| Semi-monthly $2,500 | $1,121.42 | 22.4% | $3,496.08 |
| Monthly $2,500 | $795.83 | 15.9% | $3,821.67 |
| Percentage method | $1,100 | 22.0% | $3,517.50 |
A $2,500 weekly paycheck annualizes to $130,000, so payroll pushes the bonus into the 24% bracket and above. Paid monthly, the same paycheck annualizes to $30,000 and the bonus rate drops below 22%. The employer picks the method, not the employee.
Bonus Tax With Dependents
Dependents do not change the 22% taken from a bonus under the percentage method. The flat rate ignores the W-4, Step 3 dependents included.
The credits still count on the tax return. The Child Tax Credit of $2,200 per child under 17 lowers the final tax, so a parent who had 22% withheld on a bonus may see part of it come back in the refund.
The aggregate method is different: payroll treats the bonus and the regular pay as one paycheck and withholds by the normal W-4 rules, so a Step 3 amount can lower the bonus withholding. This calculator's aggregate option leaves Step 3 at zero; the Withholding Calculator shows a paycheck with dependents.
Bonus Tax and the Big Beautiful Bill
The One Big Beautiful Bill Act did not add a tax break for bonuses. It made the seven income tax rates permanent, so the flat federal rate on supplemental wages stays 22% in 2026.
The 37% rate on supplemental pay over $1,000,000 also stays. A $1,500,000 bonus is withheld at 22% on the first million and 37% on the rest: $405,000 of federal withholding.
The Act's new deductions for 2025 through 2028 cover qualified tips (up to $25,000) and the premium half of overtime pay (up to $12,500, or $25,000 joint). A year-end, signing or retention bonus is neither, so the whole bonus remains taxable income.
How to Reduce Tax on a Bonus
The main way to reduce tax on a bonus is to send part of it into a pre-tax account before it is paid. Many 401(k) plans let your deferral percentage apply to bonus pay; the plan document says whether yours does.
Deferring $1,000 of a $5,000 bonus to a traditional 401(k) leaves $4,000 for income tax withholding: 22% of that is $880 instead of $1,100. Social Security and Medicare still apply to the full $5,000, because 401(k) deferrals remain FICA wages.
An HSA contribution made through payroll skips income tax and FICA, within the 2026 limit of $4,400 for self-only coverage or $8,750 for family coverage.
Employer Taxes on a Bonus
An employer pays its own 7.65% of Social Security and Medicare on every bonus, on top of the amount it withholds from the employee. A $5,000 bonus costs the employer $382.50 in matching FICA, $5,382.50 in all.
Both shares of Social Security stop once the employee's wages for the year pass $184,500; Medicare continues. Federal unemployment tax (FUTA) covers only the first $7,000 of each employee's yearly wages, so a bonus paid late in the year rarely adds any.
Frequently Asked Questions
How much is a bonus taxed?
A bonus is taxed 22% federal plus 7.65% FICA plus any state tax under the percentage method, about 29.65% before state tax. Bonuses over $1,000,000 are withheld at 37% federal.
How much tax will I pay on a $5,000 bonus?
You pay $1,482.50 of tax on a $5,000 bonus in a state with no income tax: $1,100 federal and $382.50 Social Security and Medicare. Take-home is $3,517.50.
Why is my bonus taxed so high?
Your bonus is taxed high because the aggregate method treats the bonus paycheck as your normal pay for the whole year. The tax return corrects over-withholding as a refund.
Is a bonus taxed differently from salary?
No. A bonus is taxed at the same income tax rates as salary on the tax return. Only the withholding method differs.
How much tax is taken out of a $10,000 bonus?
$2,965 is taken out of a $10,000 bonus under the percentage method where there is no state income tax: $2,200 federal and $765 Social Security and Medicare. You keep $7,035.
Is a bonus taxed the same in every state?
No. Federal withholding on a bonus is 22% everywhere, but the state part depends on where you work. Texas, Florida and the other states with no wage income tax take nothing from the bonus.
Can I put my bonus into my 401(k)?
Yes, if your plan lets your deferral election apply to bonus pay. The deferred part is not withheld for federal income tax now, but it still pays Social Security and Medicare.
Does the employer pay tax on a bonus?
Yes. The employer pays 6.2% Social Security and 1.45% Medicare on the bonus, matching what it withholds from you, plus any unemployment tax still due for the year.
Is this a gross to net calculator for a bonus?
Yes. Enter the gross bonus to see the federal withholding at the 22% supplemental rate, Social Security, Medicare and state tax, and the net amount you receive. Commission paid separately from salary is withheld the same way.