Why does my bonus look so heavily taxed?
Bonuses aren't taxed at a special rate — at the end of the year they're simply part of your income. What's different is withholding, the amount your employer takes out of the check. The IRS treats bonuses, commissions, severance and similar payments as supplemental wages, and most employers withhold federal income tax on them at a flat 22%. On top of that come Social Security (6.2%), Medicare (1.45%) and, in most states, state income tax. Together that often takes 30% to 40% of the bonus, which is why the deposit can look disappointing.
How bonus withholding works
- Percentage method: the bonus is paid separately (or identified separately) and federal tax is withheld at 22%. This is what most employers use and what the calculator shows.
- Over $1 million: supplemental wages above $1 million in a year must be withheld at 37%, the top tax rate.
- Aggregate method: some employers add the bonus to a regular paycheck and withhold as if you earned that much every pay period. This can withhold even more, temporarily.
- FICA: Social Security tax stops once your total wages reach $184,500 for 2026; Medicare has no limit, and an extra 0.9% is withheld on wages above $200,000.
- State tax: many states have their own supplemental withholding rate, while others use their regular tables. States with no income tax — such as Texas, Florida, Washington and Nevada — take nothing.
Will I get some of it back?
Possibly. Withholding is only a prepayment. When you file your return, your bonus is taxed at your actual marginal rate along with the rest of your income. If your top federal bracket is 10% or 12%, the 22% withheld is more than the bonus really costs, so the difference comes back as part of your refund. If you're in the 24% bracket or higher, 22% is too little, and you may owe a bit more in April. The calculator compares the two so you know what to expect.
Ways to keep more of your bonus
You can't change the withholding method, but you can lower the tax itself. Ask whether you can put part of the bonus into your traditional 401(k) (up to the annual limit), which reduces income tax, or into an HSA if you have one. If you'll owe at tax time, consider setting a little aside or adjusting your W-4. Some employers also let you defer a bonus into the next year.
Worked examples
Jordan earns $85,000 in California and receives a $10,000 bonus. The employer withholds $2,200 of federal tax (22%), $620 of Social Security, $145 of Medicare and roughly $930 of California tax, so Jordan takes home about $6,105. Because Jordan is already in the 22% federal bracket, the withholding matches the real tax and there's nothing extra to get back.
Sam earns $60,000 in Texas and gets a $5,000 bonus. Texas has no income tax, so Sam keeps about $3,518. Sam is in the 12% bracket, so the bonus really adds only $600 of federal tax, and the extra $500 withheld comes back as part of Sam's refund.
A $20,000 bonus on a $150,000 salary in Illinois nets about $13,080. Here 22% withholding is too low for the 24% bracket, so about $400 more is owed at tax time.
See how your regular paycheck is taxed with our paycheck calculator, or estimate your full return with the tax refund calculator.
Frequently asked questions
What is the federal tax rate on bonuses in 2026?
How much of a $5,000 bonus will I take home?
Are bonuses taxed more than regular pay?
Can I put my bonus in my 401(k) to avoid taxes?
Sources & methodology
This calculator was last reviewed on November 2, 2026. Figures are based on the following official and primary sources:
- IRS Publication 15 (Circular E) – Supplemental wages
- IRS Publication 15-T – Federal income tax withholding methods
- IRS Revenue Procedure 2025-32 (2026 inflation adjustments)
- Tax Foundation, State Individual Income Tax Rates and Brackets, 2026
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