Step-by-Step Breakdown of the Components
The first thing to clear up is the difference between withholding and taxation. A bonus can be subject to federal income-tax withholding under the supplemental-wage rules, but the withholding amount is not necessarily the final federal income tax you will owe on that money.
The IRS treats bonuses and certain other irregular payments as supplemental wages. For separately identified supplemental wages, an employer may use a flat 22% federal income-tax withholding rate under the applicable rules.
Other withholding methods can also apply depending on how the payment is handled.
Taxes, Deductions, and Adjustments
That is why a bonus may appear to have a larger federal withholding deduction than you expected. It does not automatically mean your final tax rate on the bonus is 22%.
FICA can also apply. Employee Social Security and Medicare taxes generally apply to covered wages, including qualifying supplemental wages. For 2026, Social Security is 6.2% up to the $184,500 wage base and Medicare is 1.45% without a wage-base limit. Additional Medicare withholding can apply after an employer pays an employee more than $200,000 in wages during the year. turn0search5■ State and local taxes may also be withheld depending on where you work and the applicable rules.
Consider a $5,000 bonus paid separately from a regular paycheck. If the employer uses the optional flat-rate federal withholding method, $1,100 could be withheld for federal income tax alone. That does not mean the employee ultimately owes exactly $1,100 of federal tax on the bonus.
Estimating and Verifying Your Paycheck
Your final tax liability is determined when your tax return is calculated using your full-year income and applicable tax rules.
This distinction matters for financial planning. If your bonus seems “over-taxed,” compare the withholding with the amount that ultimately reaches your bank account, but don't conclude that the withholding percentage is your final tax rate.
A paycheck calculator can help estimate the effect of a bonus, but it needs to know whether the payment is being treated as supplemental wages and what other payroll information applies.
The practical lesson is reassuring without being misleading: a smaller bonus check does not necessarily mean the bonus was permanently taxed at the withholding rate you see on the statement.