Salary & Paycheck · February 19, 2026 · 4 min read
Bonus Pay: How It's Taxed and What You'll Actually Take Home
Bonus payments often arrive smaller than expected once taxes are withheld, leading to a common assumption that bonuses are taxed at a higher rate than regular income. The reality is more about withholding mechanics than your actual tax rate.
The flat withholding rate that surprises people
The IRS allows employers to withhold federal tax on bonuses (and other supplemental wages) at a flat 22% rate for amounts under $1 million in a calendar year, separate from your regular paycheck's withholding calculation. This flat rate is often higher than what your actual marginal tax bracket would suggest, which is why bonus checks can feel more heavily taxed.
Withholding isn't the same as your final tax bill
That 22% is withholding at the time of payment, not necessarily your true tax rate on that income. When you file your return, the bonus is combined with your total annual income and taxed at your actual marginal rates — meaning you may get some of that withholding back as part of your refund if your effective rate turns out lower than 22%.
A Bonus Tax Calculator estimates your net bonus after this flat withholding, alongside FICA taxes that also apply.
How this connects to your overall withholding picture
If bonuses are a regular part of your compensation, it's worth periodically checking whether your overall withholding — salary plus bonuses combined — is tracking closely to your actual expected tax liability using a Tax Withholding Calculator, rather than assuming the bonus withholding sorts itself out automatically.
A bonus withholding example
A $5,000 bonus has roughly $1,100 withheld for federal tax under the 22% flat rate, plus FICA taxes, netting around $3,517.50 immediately. If your actual marginal tax bracket is lower than 22%, some of that withholding is returned as part of your tax refund when you file.
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Published February 19, 2026. This article is for general informational purposes only — read our disclaimer.