How bonuses are taxed in 2026
The IRS treats bonuses, commissions, severance and similar payments as supplemental wages. Employers choose between two withholding methods, and both are shown by this calculator:
- Percentage (flat-rate) method. If the bonus is separately identified, the employer withholds a flat 22% for federal income tax. Once your supplemental wages for the year exceed $1 million, the excess is withheld at 37%, and this is mandatory.
- Aggregate method. The bonus is combined with regular wages for the period and withholding is calculated on the total using the regular withholding tables; the tax already withheld on regular pay is then subtracted.
Social Security tax (6.2% up to $184,500 of wages), Medicare (1.45%) and, above $200,000 of wages, the 0.9% Additional Medicare Tax apply to bonuses just like regular pay. State rules vary, and many states apply a flat supplemental rate. Our estimate uses the actual extra state tax caused by the bonus.
Example: a $10,000 bonus on an $80,000 salary
For a single filer in California paid biweekly with an $80,000 salary, the calculator shows:
| Method | Federal | FICA | State (est.) | Net bonus |
|---|---|---|---|---|
| Flat 22% method | $2,200.00 | $765.00 | $930.00 | $6,105.00 |
| Aggregate method | $2,821.70 | $765.00 | $930.00 | $5,483.30 |
| Actual added tax at filing | $2,200.00 | $765.00 | $930.00 | $6,105.00 |
The flat method withholds $2,200.00 for federal tax. The actual extra federal tax created by the bonus is also $2,200.00, because a single filer with $80,000 of salary is already in the 22% bracket and the whole bonus stays in it, so the flat method is a near-perfect match. The aggregate method, by contrast, withholds $2,821.70, about $621.70 more than needed, which you would get back as part of your refund. For someone in the 12% bracket, the flat method over-withholds; for someone in the 24% bracket or higher, it under-withholds and a balance may be due at filing.
Ways to keep more of a bonus
- Increase your 401(k) deferral for the bonus period. Many plans let you elect a percentage of bonus pay. A traditional deferral comes off before income tax (but not FICA).
- Fund an HSA through payroll. Payroll HSA contributions avoid income tax and FICA. The 2026 limits are $4,400 self-only and $8,750 family.
- Ask for deferred or split payment. A bonus paid in January rather than December shifts the income to the next tax year, which can matter near a bracket edge.
- Adjust your W-4 for the rest of the year if you are consistently over- or under-withheld. See the W-4 explained guide.
Limits of this calculator
The “actual added tax” line compares your annual tax with and without the bonus using 2026 brackets, assuming your salary is your only income and you take the standard deduction. State withholding on supplemental wages may differ from the state tax shown, which is the true added liability. Read more in How Bonuses Are Taxed.