How Are Bonuses Taxed in 2026?

Why Your Bonus Check Looks Small

A bonus is supplemental wages — the IRS category for pay outside your regular salary: bonuses, commissions, severance, and (for withholding) some overtime. When your employer pays a bonus separately from salary, it may withhold federal income tax at a flat 22% instead of running it through your W-4. Add 7.65% FICA and any state withholding, and a $10,000 bonus can shrink to under $7,000 before it reaches your account.

The key mental model: withholding is not tax. The 22% is a deposit against your real 2026 tax, which is computed once — on your total income — when you file in 2027.

The Two Withholding Methods

Employers choose between two approaches, and they explain most paycheck surprises:

• Percentage method (flat 22%): used when the bonus is paid separately or separately identified. Simple, predictable, and blind to your actual bracket. Above $1 million of supplemental wages in a year, withholding jumps to a mandatory 37%.
• Aggregate method: the bonus is added to a regular paycheck and the whole amount is withheld using your W-4 as if every check were that big. This often withholds more than 22% because the payroll system annualizes a one-time spike.

Neither method changes what you ultimately owe. They only change the timing of the money.

What Your Bonus Is Really Taxed At

Your bonus lands on top of your salary and is taxed at your marginal rate — the rate on your next dollar. For a single filer in 2026 (after the $16,100 standard deduction):

Example: a single filer in Texas earning $100,000 who gets a $10,000 bonus keeps about $7,035 of it after the 22% federal withholding ($2,200) and FICA ($765) — and because their marginal rate is exactly 22%, nothing more is due at filing. The earner at $60,000 in the 12% bracket gets roughly $1,000 of that withholding back as a refund.

Refund or Balance Due?

Whether April brings money back or a bill depends on the gap between 22% and your real marginal rate. Under $66,500 of taxable income (12% bracket), flat withholding over-collects and you get a refund. In the 22% bracket it is nearly exact. Once your income pushes into the 24% bracket and beyond, the flat rate under-withholds — on a $30,000 bonus at a 32% marginal rate, you would owe about $3,000 more than was withheld. High earners should set that aside in December rather than discover it in April.

Legit Ways to Shrink Bonus Tax

You cannot change the 22% withholding, but you can change the taxable income the bonus lands on:

• Defer it into your 401(k). Many plans let you elect a higher deferral on bonus checks. Up to the $24,500 annual limit, those dollars skip federal and most state income tax entirely this year.
• Fund your HSA through payroll before year-end if you have room under the $4,400 / $8,750 limits — it even avoids FICA.
• Time it across years. If your employer offers a choice between a December and January payout, the January check moves the income into your 2027 return — worth real money if 2026 is an unusually high-income year.

What does not work: asking payroll to "tax it less." The withholding method is the employer's choice, and the tax itself is fixed by law.

Frequently Asked Questions