A $5,000 year end bonus rarely shows up as $5,000. Most employers withhold federal income tax on bonuses at a flat 22%, then take Social Security and Medicare on top. In a state with an income tax, that comes out too.
Enter your bonus and your pay so far this year, and the calculator above shows what lands in your bank account. It also checks two things people forget in December: if you’ve already passed the Social Security wage limit, and if the 22% is more or less than you’ll owe in April.
What comes out of a bonus
The IRS treats bonuses, commissions and severance as supplemental wages. When an employer pays one separately from regular pay, it can withhold federal income tax at a flat rate instead of running it through your W-4. That rate is 22% for the first $1 million of supplemental pay in the year and 37% on anything above it. The rules are in IRS Publication 15.
Payroll taxes are the same as on any paycheck:
- Social Security: 6.2%, but only on wages up to $184,500 in 2026
- Medicare: 1.45% on all wages
- Additional Medicare: another 0.9% on wages above $200,000 for the year
So a $5,000 bonus with no state tax looks like this: $1,100 federal, $310 Social Security, $72.50 Medicare. You take home $3,517.50, about 70%.
In a state that withholds 5% on bonuses, another $250 comes out, and the check drops to $3,267.50.
The 22% isn’t your actual tax
Withholding is a prepayment. Your real tax on the bonus is settled when you file, at your actual bracket.
If you’re in the 12% bracket, 22% is too much. On a $5,000 bonus, about $500 of the federal withholding should come back to you in your refund, assuming nothing else changes.
If you’re in the 24% bracket, 22% is a little short. You’d owe roughly $100 more per $5,000. At 32%, that gap is $500. For most people at that level, the regular paycheck withholding covers some of it, but a large bonus can still leave a bill in April.
The calculator’s comparison is a simple estimate. A big bonus can push part of your income into the next bracket, and credits or deductions can change the picture.
When the bonus crosses the Social Security limit
Higher earners notice something odd late in the year: a paycheck gets bigger. That’s because Social Security tax stops once your wages for the year reach $184,500.
If you’ve earned $180,000 by the time a $20,000 bonus arrives, only $4,500 of the bonus is taxed for Social Security. That’s $279 instead of $1,240. If you’ve already passed $184,500, the bonus has no Social Security tax at all.
Medicare works the other way. It never stops, and once your wages pass $200,000, your employer has to withhold an extra 0.9% on the amount above that line.
Why your bonus check might look worse than this
The flat 22% method only applies when the bonus is paid separately or clearly separated on the pay stub. Some employers instead add the bonus to a regular paycheck and run the whole thing through the normal withholding tables. That’s called the aggregate method.
The tables then assume you earn that much every pay period, all year. A $3,000 regular check plus a $5,000 bonus gets taxed as if you make $8,000 every two weeks. Withholding can jump well past 22%.
It isn’t extra tax. Anything withheld over what you owe comes back when you file. But if you were counting on the money in December, it helps to ask payroll which method it uses.
Ways to keep more of a bonus
Put part of it in your 401(k). Many plans let you defer a percentage of bonuses. That money skips federal income tax now, though Social Security and Medicare still apply. The 2026 employee limit is $24,500, and contributions have to come out of a paycheck dated by December 31. Our guide to which tax moves have to happen by December 31 covers the timing.
Check your W-4 if you’ll owe. If the calculator shows a gap at your bracket, you can raise withholding on your last few paychecks with a new W-4. That avoids a surprise in April.
Remember that overtime rules differ. The new deduction for overtime pay doesn’t cover bonuses. A holiday bonus is ordinary supplemental pay. See our no tax on overtime guide for what does qualify.
Questions people ask
Are bonuses taxed more than regular pay?
No. They’re withheld differently, at a flat rate, but the tax you owe at filing is the same as on any other wage. If the 22% was too much for your bracket, you get it back.
Can my employer withhold more than 22%?
Yes, if it uses the aggregate method or if you’ve asked for extra withholding on your W-4. Above $1 million in supplemental pay, the 37% rate is mandatory.
What state rate should I enter?
Many states with an income tax use a flat rate for bonuses. A past bonus pay stub shows the percentage. Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming don’t tax wages, so enter 0 there.
Is a gift card from my employer taxed?
Yes. The IRS counts gift cards and other cash equivalents as wages no matter how small. A $100 holiday gift card should show up on your pay stub and your W-2. A ham or a turkey handed out to everyone is usually different, since small noncash gifts can be left out of income.
Is severance taxed the same way?
Yes. Severance is supplemental pay, so the same 22% flat rate and payroll taxes apply. If you lost your job late in the year, our guide to the first 14 days after a layoff covers what to do with it.
Does a bonus affect my benefits or credits?
It can. A bonus raises your income for the year, which can reduce income based credits like the earned income tax credit or ACA premium help. If you’re close to a cutoff, it’s worth checking before year end.
An estimate using 2026 federal withholding rules for supplemental wages. It does not include local taxes, other pre-tax deductions or the bracket effects of a large bonus. Your pay stub shows the actual amounts.