How bonuses are taxed in 2026, and why 22% is withheld
A 2026 bonus is taxed as wages, at your regular rates. Your employer may withhold a flat 22% up front, and your tax return settles what you really owe.
A bonus is taxed as ordinary wages, added to your 2026 income and taxed at your regular rates when you file. Only the withholding differs: under the Internal Revenue Service (IRS) employer guide, a separately paid bonus can have a flat 22% withheld. The part of your supplemental wages, such as bonuses and commissions, above $1 million in a year is withheld at 37%. Social Security and Medicare tax also come out of a bonus, whatever the income tax method.
- Withholding is a prepayment, not the tax: your return compares the two, and you get a refund or owe the difference.
- The flat 22% rate is optional; your employer can instead add the bonus to a paycheck and withhold on the total.
- Social Security tax (6.2% on 2026 wages up to $184,500) and Medicare tax (1.45%) also come out of a bonus.
How employers withhold federal income tax on a bonus
The IRS calls a bonus a supplemental wage, meaning pay outside your regular wages, like commissions, severance pay, back pay, awards and prizes. How much income tax your employer withholds from it depends on how the bonus is paid, as the table shows.[1]
| How the bonus is paid | How withholding is figured |
|---|---|
| In your paycheck, not shown separately | As if the paycheck and bonus were one regular payment |
| Paid separately, or shown as its own amount on the pay stub, and income tax was withheld from your pay this year or last | Your employer chooses: a flat 22%, or the aggregate method |
| Paid separately, or shown as its own amount on the pay stub, and no income tax was withheld from your pay this year or last | The aggregate method |
| Your supplemental wages from this employer and businesses under its common control pass $1 million in the year | 37% on the amount above $1 million, whatever your Form W-4 says |
In the aggregate method, your employer adds the bonus to your regular pay for the period and figures withholding on the total. It then subtracts the tax already withheld from your regular pay and withholds the rest from the bonus.[1]
In an IRS example, an employee paid $2,000 a month, single with no other Form W-4 entries, gets a $1,000 bonus. The aggregate method withholds $114 from that bonus, while the flat rate would withhold $220.[1]
What you really owe on a bonus
A bonus is part of your income and appears on your Form W-2 with the rest of your pay. A bonus your employer only promises to pay later is not taxable until you receive it or it is made available to you.[2]
On your return, the bonus is taxed with the rest of your taxable income, which is your income minus your deductions. For 2026, the standard deduction is $16,100 for single filers and $32,200 for married couples filing jointly.[3]
| Rate | Single: taxable income over | Married filing jointly: taxable income over |
|---|---|---|
| 10% | $0 | $0 |
| 12% | $12,400 | $24,800 |
| 22% | $50,400 | $100,800 |
| 24% | $105,700 | $211,400 |
| 32% | $201,775 | $403,550 |
| 35% | $256,225 | $512,450 |
| 37% | $640,600 | $768,700 |
Withholding during the year is only a prepayment toward that tax, and your return settles the difference. If too little was withheld over the year, you owe the difference, and if too much was withheld, you get a refund.[4]
Check the W-2 filing deadlines for the form that reports your bonus. Overtime has a separate rule: see the overtime deduction for 2026.
If a bonus is part of a job offer you are weighing, see how to negotiate salary before you accept the terms.
How to check the tax on your bonus
Before you start, have 3 things ready: your bonus pay stub, your latest regular pay stub and an estimate of your 2026 income.
- Find the federal income tax withheld from the bonus on its pay stub, not the total of all taxes.
- Divide that amount by the bonus, and note that a result of 22% means your employer used the flat rate.
- Subtract your deductions from your expected 2026 income to estimate your taxable income without the bonus.
- Find the rate or rates in the table between your taxable income without the bonus and your taxable income with it.
- Multiply the bonus, or each part of it, by its rate to estimate the tax the bonus adds.
- Compare that estimate with the federal income tax withheld from the bonus in step 1.
The result tells you whether the bonus leaves you ahead or behind when you file your 2026 return. If too little was withheld, give your employer a new Form W-4 with an extra amount per paycheck in step 4(c). The IRS Tax Withholding Estimator, on the IRS website, can work out how much extra to ask for.[4]
If your bonus was paid with your regular pay and not shown separately, step 1 will not work. Compare the whole paycheck's withholding with that of a regular paycheck instead.[1]
Sources
Scope: Covers federal income tax withholding and federal tax on bonuses paid to employees in 2026, as of October 23, 2026. Does not cover state or local income tax, bonuses paid to contractors, stock awards or retirement plan deferrals. For your situation, contact the IRS or a tax professional.
- Publication 15 (2026), (Circular E), Employer's Tax GuideInternal Revenue Service · Accessed October 23, 2026
- Publication 525 (2025), Taxable and Nontaxable IncomeInternal Revenue Service · Accessed October 23, 2026
- IRS releases tax inflation adjustments for tax year 2026, including amendments from the One, Big, Beautiful BillInternal Revenue Service · Accessed October 23, 2026
- Publication 505 (2026), Tax Withholding and Estimated TaxInternal Revenue Service · Accessed October 23, 2026
Posts are signed by their author and dated by publication. See an error? Email support@job.com. Corrections are listed on the corrections page.
Read our editorial standards
Social Security and Medicare tax on a bonus
Whatever the income tax method, a bonus is subject to Social Security and Medicare tax like the rest of your pay. For 2026, you pay 6.2% Social Security tax on wages up to $184,500 and 1.45% Medicare tax on all wages.[1]
Once your wages from one employer pass $200,000 in a year, that employer also withholds a 0.9% Additional Medicare Tax. The tax itself applies above $200,000 for a single filer but above $250,000 on a joint return, so the two can differ.[1][4]
At the flat rate, 29.65% of a bonus is withheld while your 2026 wages from this employer stay under the $184,500 limit. That is 22% income tax plus 7.65% for Social Security and Medicare, and any state or local income tax comes on top.[1]