What is the federal tax rate on a bonus in 2026?

For 2026, the IRS supplemental wage withholding rate is 22 percent on bonuses up to $1 million per calendar year, and 37 percent on any portion above $1 million. This is a withholding rate, not your final tax rate. The One Big Beautiful Bill Act (Public Law 119-21) permanently extended the individual income tax rates established by the Tax Cuts and Jobs Act, which is why the 22 percent and 37 percent supplemental rates carry forward into 2026. See IRS Publication 15 (2026), section 7.

What is the difference between the flat rate method and the aggregate method?

The flat rate method withholds 22 percent on your bonus (or 37 percent above $1 million) regardless of your regular pay. It is simpler but usually over-withholds for lower earners and under-withholds for high earners. The aggregate method combines your bonus with your regular paycheck, calculates federal withholding on the combined amount using Form W-4 and the 2026 Percentage Method tables in Publication 15-T, subtracts the withholding that would have applied to regular pay alone, and treats the difference as withholding on the bonus. The employer chooses which method to apply. The aggregate method is required if the bonus is not identified separately from regular wages.

Why does it feel like my bonus is taxed at 40 or 50 percent?

Your bonus is not taxed at a higher rate. It is withheld at a higher rate. On a typical employer-paid bonus, the federal supplemental withholding is 22 percent, plus Social Security (6.2 percent), Medicare (1.45 percent), and possibly state tax. That is roughly 30 to 40 percent taken out before you see the money. Your actual federal tax on the bonus is determined when you file your return and depends on your total annual income, deductions, and credits. If your effective marginal rate is below 22 percent, you will get the over-withheld portion back as part of your refund. If your marginal rate is above 22 percent, you may owe more at filing.

Does a bonus affect Social Security and Medicare taxes?

Yes. Social Security tax (6.2 percent) applies to your bonus up to the 2026 annual wage base of $184,500. Once your combined wages (regular plus bonus) exceed $184,500 in the calendar year, no further Social Security tax is withheld. Medicare tax (1.45 percent) applies to the entire bonus with no wage base cap. If your combined wages for the year exceed $200,000 ($250,000 married filing jointly, $125,000 married filing separately), the Additional Medicare Tax of 0.9 percent also applies to the excess. Employers are required to begin withholding the Additional Medicare Tax once an employee's wages exceed $200,000 in the calendar year, regardless of filing status.

Do I pay state income tax on a bonus?

In most states, yes. States with no individual income tax (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming) do not tax bonuses. New Hampshire taxes only interest and dividend income through 2024, making it effectively wage-tax free. Other states either apply a flat supplemental rate (for example, Illinois at 4.95 percent, Pennsylvania at 3.07 percent, Georgia at 5.39 percent for 2025 per HB 111), or apply regular withholding on the combined pay. California applies a higher supplemental rate on bonuses (10.23 percent) than on stock options and regular supplemental pay (6.6 percent). Check your state Department of Revenue for the current rate.

Can I reduce the tax on my bonus by contributing it to a 401(k)?

Possibly. If your employer's 401(k) plan allows deferrals from bonuses, you can elect to have part or all of the bonus deferred into your 401(k) pre-tax, which reduces federal (and usually state) income tax withholding on the deferred amount. Social Security and Medicare taxes still apply to the deferred amount because 401(k) deferrals are not exempt from FICA. Not all plans permit bonus deferrals, and the election usually has to be made before the bonus is paid. Check with your employer's plan administrator. The 2026 elective deferral limit for 401(k) plans is set by the IRS each year and includes any bonus deferral.

Are bonuses subject to the $1 million 37 percent rate cumulative per employer or across all employers?

The $1 million threshold is per employer per calendar year. If an employee receives $800,000 in supplemental wages from Employer A and $400,000 from Employer B in the same calendar year, neither employer is required to apply the 37 percent rate because neither one individually paid more than $1 million. The employee's combined supplemental wages of $1.2 million may be under-withheld, and the employee would owe the difference at filing. See IRS Publication 15 (2026), section 7, Withholding on supplemental wages when an employee receives more than $1 million of supplemental wages from you during the calendar year.

Are tips and overtime pay the same as a bonus for withholding?

IRS Publication 15 treats tips and the premium portion of overtime as supplemental wages for withholding purposes. The flat 22 percent supplemental rate may be applied to both, or they can be aggregated with regular pay. The One Big Beautiful Bill Act of 2025 added new income tax deductions for qualified tips (up to $25,000) and qualified overtime premium (up to $12,500 single or $25,000 MFJ) on the employee's income tax return, but those deductions do not change how the employer withholds federal tax on the supplemental wages. Withholding and tax liability are separate calculations. See the No Tax on Tips Calculator and No Tax on Overtime Calculator for the deduction-side math.

Is the 22 percent bonus rate the same as my income tax rate?

No. The 22 percent figure is a federal withholding rate, not a marginal income tax rate. Your marginal rate depends on your taxable income after all deductions and credits. A single filer with $50,000 of taxable income in 2026 is in the 12 percent marginal bracket and will likely get back the difference between 22 percent withheld and about 12 percent owed on the bonus. A single filer with $300,000 of taxable income is in the 35 percent marginal bracket and will owe more at filing because the 22 percent flat withholding is below their marginal rate.

Does this calculator include state withholding?

No. This calculator returns federal income tax withholding plus Social Security, Medicare, and Additional Medicare Tax only. State supplemental rates vary widely and change annually. To estimate state withholding, multiply your bonus by your state supplemental rate if your state uses a flat method, or use your state Department of Revenue's percentage method tables for bracket-based states. States with no income tax (Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire for wages) apply no state tax to the bonus.

Bonus Tax Calculator 2026 - Flat Rate vs Aggregate Method Withholding

Estimate federal withholding on your bonus under IRS supplemental wage rules. Compares the flat 22 percent rate to the aggregate method, then adds Social Security, Medicare, and Additional Medicare Tax. Your take-home bonus is what remains after all four withholding layers.

Your Bonus Details

Withholding Method

Flat Rate (22% / 37%)

Aggregate Method

Flat rate is the default when the bonus is identified separately from regular wages. Aggregate is used when a bonus is combined into a regular paycheck. Confirmed per IRS Pub 15 §7.

Filing Status

Used for the Additional Medicare Tax threshold and the aggregate method brackets. $200K single/HOH, $250K MFJ, $125K MFS.

Bonus Amount ($)

Gross bonus before any withholding. For spot bonuses, signing bonuses, year-end bonuses, or commission supplements.

YTD Wages So Far This Year ($)

Your gross wages received so far in the calendar year (from your latest paystub YTD). Used for the Social Security wage base cap ($184,500) and Additional Medicare threshold.

Regular Pay Per Period ($)

Your gross pay before the bonus for a single pay period (used only for aggregate method).

Pay Frequency

Used to annualize wages for the aggregate method percentage-method calculation.

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Enter your bonus details
to estimate withholding and take-home

Item	Value	Status
Supplemental flat withholding rate (bonus ≤ $1M)	22%	Confirmed
Supplemental rate on amount over $1M (per employer, calendar year)	37%	Confirmed
Social Security rate (employee share)	6.2%	Confirmed
2026 Social Security wage base	$184,500	Confirmed
Medicare rate (employee share)	1.45%	Confirmed
Additional Medicare Tax rate	0.9%	Confirmed
Additional Medicare threshold: Single / HOH	$200,000	Confirmed
Additional Medicare threshold: MFJ	$250,000	Confirmed
Additional Medicare threshold: MFS	$125,000	Confirmed
Employer mandatory Additional Medicare withholding threshold	$200,000 (per employee, regardless of filing status)	Confirmed
Governing statute (supplemental wages)	IRC §3402(g); IRS Pub 15 §7	Confirmed
Aggregate method tables	IRS Pub 15-T Percentage Method	Confirmed
OBBBA rate extension	PL 119-21 permanently extended TCJA rates, keeping 22% / 37%	Confirmed
State supplemental rates	Varies by state - see state DOR	Provisional

Bonus Tax Calculator 2026

Quick Facts: Bonus Withholding (Tax Year 2026)

How This Is Calculated

Step 1: Federal Income Tax - Flat Rate Method Confirmed

Step 2: Federal Income Tax - Aggregate Method Confirmed

Step 3: FICA - Social Security + Medicare Confirmed

Step 4: Additional Medicare Tax Confirmed

Assumptions

Flat Rate vs Aggregate Method - When Each Applies

When Bonus Withholding Differs From Final Tax

Real-World Examples

Practitioner Insight (LMN Tax Inc.)

When This Estimate May Not Apply

Frequently Asked Questions

What To Do Next

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