How Bonuses Are Taxed and Why Your Check Looks Smaller Than Expected
Last updated July 2, 2026
Last reviewed July 8, 2026
The IRS classifies bonuses as supplemental wages. When paid separately from regular wages, employers may use the optional flat federal withholding method, often 22 percent on amounts under $1 million in a calendar year, or may use the aggregate method. Contrary to a persistent myth, this withholding rate is not a special bonus tax, it is an estimate reconciled with your actual tax liability when you file your annual return. FICA taxes apply to bonus payments the same as regular wages. A $10,000 bonus reduces to approximately $6,500 to $7,100 in after-tax take-home depending on combined federal, FICA, and state withholding.
Some employers use the aggregate method instead of the flat rate. Under this approach, the bonus is added to the most recent regular paycheck, annualized to estimate yearly income, and withholding is calculated on that combined basis. The aggregate method often results in higher withholding because the annualized income may push the employee into a higher bracket. If your income places you in a bracket lower than 22 percent, the flat-rate withholding overstates your actual tax liability and the excess is returned as a refund.
Expect the net bonus to be lower than the gross amount once federal withholding, FICA, and any state withholding are applied. The exact figure depends on your bracket, state, payroll setup, and whether your employer uses the optional flat-rate method or the aggregate method. If you are planning around a specific net amount from a bonus, calculate the after-tax figure first rather than assuming the gross.