Bonus Tax Rate 2026: Why Your Bonus Looks So Heavily Taxed
A $5,000 bonus sounds great until the deposit shows up and it’s closer to $3,500, or even less if your state has an income tax. It can feel like bonuses are taxed at a special, punishing rate.
They aren’t. Bonuses are taxed exactly like the rest of your salary. What’s different is how much gets withheld up front, and that difference usually evens out when you file your return.
The 22% flat rate
The IRS treats bonuses, commissions, severance and similar payments as “supplemental wages.” Employers can withhold federal income tax on them in one of two ways.
The percentage method is the most common. Your employer simply withholds 22% for federal income tax, no matter what your W-4 says or what bracket you’re in. If your total supplemental pay for the year goes over $1 million, everything above that is withheld at 37%.
The aggregate method adds the bonus to a regular paycheck and withholds as if you earned that much every pay period. This often takes out even more, because for that one check it looks like you have a much higher annual salary.
What a $5,000 bonus really looks like
Using the percentage method:
| Amount | |
|---|---|
| Bonus | $5,000.00 |
| Federal income tax (22%) | -$1,100.00 |
| Social Security (6.2%) | -$310.00 |
| Medicare (1.45%) | -$72.50 |
| Before state tax | $3,517.50 |
Then state tax comes out. Some states use a flat supplemental rate too. California, for example, withholds 10.23% on bonuses, which would take another $511.50. States without an income tax take nothing.
Will you get some of it back?
It depends on your actual tax bracket.
- If your top bracket is 10% or 12%, 22% is more than you’ll really owe on that bonus. The extra comes back as part of your refund.
- If you’re in the 22% bracket, the withholding is about right.
- If you’re in the 24% bracket or higher, 22% isn’t enough, and you’ll owe the difference when you file. This catches a lot of people with large bonuses or RSU vesting off guard.
For a single filer in 2026, the 24% bracket starts at $105,700 of taxable income, which is roughly $121,800 in salary after the standard deduction. If you’re above that and get a big bonus, consider adding some extra withholding on your W-4 for the rest of the year.
Social Security and Medicare don’t work this way. They’re flat rates, so what’s withheld is what you owe. The one exception is Social Security’s wage cap: once you’ve earned $184,500 in 2026, it stops being taken out at all.
Ways to keep more of a bonus
A few legitimate options, depending on what your employer allows:
- Send part of it to your 401(k). Many plans let you set a separate contribution percentage for bonuses. Money that goes to a traditional 401(k) skips federal income tax (and state tax in every state except Pennsylvania).
- Put it in an HSA if you’re eligible. Payroll HSA contributions skip income tax and FICA, up to $4,400 for self-only coverage or $8,750 for a family in 2026.
- Time it, if you have any say. A December bonus and a January bonus can land in different tax years, which matters if your income is changing a lot between years.
What doesn’t work: asking payroll to withhold less than 22%. For bonuses paid separately from regular wages, they generally have to use the flat rate or the aggregate method.
The short version
Your bonus isn’t taxed more than your salary. It’s withheld at a flat rate that might be a little high or a little low for you, and your tax return settles the difference. If you want to see what your whole year looks like with the bonus included, add it to your salary in the paycheck calculator.