How Bonuses Are Taxed in 2026, and What You Get Back
The 22% taken out of your bonus is withholding, not what you actually owe.
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Marcus Ellery Senior editor, tax and payrollMarcus edits the tax and paycheck desks, and owns the federal figures every calculator on the site reads from.
Employers withhold a flat 22% federal tax on bonuses and other supplemental wages up to $1 million in 2026, and 37% on anything above that. This is withholding, not your final tax. Your bonus is taxed at your ordinary marginal rate when you file, so many people get part of it back.
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The short version
- A bonus is ordinary income taxed at your normal federal rates; only the withholding on the day it is paid follows a different rule.
- Employers using the percentage method withhold federal income tax from a bonus at a flat 22% in 2026, and 37% on any part of a single year's supplemental wages above $1,000,000.
- Social Security at 6.2% and Medicare at 1.45% come out of a bonus on top of income tax withholding, so a $10,000 bonus loses $2,965 before any state tax.
- If your marginal rate is above 22% the flat withholding leaves you short at filing time; if it is 12% you get the excess back as refund.
- Deferring part of a bonus into a 401(k) reduces the federal income tax on it but not the Social Security and Medicare tax.
Key figures · 2026
- Federal withholding on bonuses
- 22%
- IRS Rev. Proc. 2025-32
- Rate above $1M
- 37%
- IRS
- Social Security
- 6.2%
- SSA
- Medicare
- 1.45%
- SSA
Contents
Why was 22% taken out of my bonus?
Because the IRS treats a bonus as a supplemental wage, and the default withholding rate on supplemental wages is a flat 22% for the first $1 million paid in a calendar year. Anything above $1 million is withheld at 37%.
That rate has nothing to do with your tax bracket. It is a fixed percentage your employer applies regardless of what you earn.
Is 22% the tax I actually pay?
No. Withholding is a prepayment, not a settlement. When you file, the bonus is added to your other income and taxed at your ordinary marginal rate.
- If your marginal rate is 12%, too much was withheld and the difference comes back as a refund.
- If your marginal rate is 32%, not enough was withheld and you will owe the difference.
What else comes out of a bonus?
FICA applies to a bonus exactly as it does to salary:
| Component | Rate | Cap |
|---|---|---|
| Social Security | 6.2% | Stops above $184,500 of wages |
| Medicare | 1.45% | No cap |
| Additional Medicare | 0.9% | Above $200,000 (single) |
State tax may apply on top. Eight states withhold nothing because they have no income tax at all.
How much of a $5,000 bonus will I keep?
Federal withholding takes $1,100. Social Security and Medicare take $382.50 combined, assuming you are below the wage base. That leaves $3,517.50 before any state tax, and the federal portion is subject to reconciliation when you file.
Can I reduce the tax on a bonus?
You cannot change the withholding rate, but you can change your taxable income. Directing part of a bonus into a 401(k) (up to the $24,500 limit for 2026) reduces the income the bonus is eventually taxed on. Some employers allow a separate deferral election for bonuses.
Frequently asked questions
Why is my bonus taxed at 22%?
That is the flat IRS withholding rate on supplemental wages up to $1 million per year. It is not a tax bracket.
Will I get some of it back?
If your marginal rate is below 22%, yes, the excess comes back as a refund when you file.
Is a bonus taxed more than salary?
No. It is withheld differently but taxed identically once you file. The higher rate is a timing difference, not a penalty.
Does FICA apply to bonuses?
Yes. Social Security at 6.2% up to the $184,500 wage base, and Medicare at 1.45% with no cap.
What happens above $1 million?
Supplemental wages above $1 million in a calendar year are withheld at 37%, the top marginal rate.
Can I put my bonus in a 401(k)?
Many employers allow it, up to the $24,500 elective deferral limit for 2026. That defers the income tax, though FICA still applies.
Sources
Every figure on this page is attributed to a named source with the date it took effect. Our reviewers check them against the primary source before publication.
About our expert
Senior editor, tax and payroll
Experience
Marcus edits everything on this site that turns on a federal or state tax figure: brackets, standard deductions, withholding thresholds, FICA caps and the state rate tables behind the paycheck tools.
His working rule is that a number appears on a page only if it also exists in the data layer with a source and an effective date attached, so an article and the calculator beside it can never disagree.
Areas of expertise
- Federal tax
- State income tax
- Payroll withholding
- FICA
Comments (2)
- Dana Whitfield Yesterday
This finally explains why my refund was bigger than I expected last year. The distinction between withholding and actual tax owed is the part nobody spells out.
- Jane Doe, CPA Staff Yesterday
Exactly right. The 22% is a flat withholding rate the IRS sets for supplemental wages. It has nothing to do with your bracket. You settle up when you file.