Why was my bonus taxed at 40%?

It was not taxed at 40% — that much was withheld. Federal income tax on a bonus comes off at a flat 22% under the percentage method, and social security, Medicare and state tax sit on top, which reaches 30-40% before any of it is settled. Your actual tax on the bonus is whatever your bracket turns out to be in April.

What is the bonus tax rate for 2026?

There is no bonus tax rate. Supplemental wages are withheld at a flat 22% federally, and at 37% on the part above $1,000,000 in a year. That is a withholding rule from Publication 15, not a rate of tax, and a bonus is ordinary income taxed at your ordinary rates.

Will I get some of it back?

If your marginal rate is below 22%, yes — the over-withholding comes back as refund. If it is above 22%, the opposite: too little was taken and the balance is due in April. The calculator prints both cases against the salary you enter.

What is the aggregate method?

The alternative your employer may use: the bonus is added to your regular pay for that period and withheld as though you earned that much every period. It usually withholds more than the flat 22% because a single large period looks like a much higher annual income. Neither method changes the tax; both change the timing.

Can I avoid the withholding?

Not on the bonus itself. What you can do is reduce the taxable amount before it is paid — deferring it into a 401(k) or an HSA up to the annual limit removes it from income tax, though social security and Medicare are still charged. Some employers allow a bonus-specific deferral election.

Bonus tax calculator

A $10,000 bonus is withheld at $2,965, leaving $7,035 — 22% federal whatever your bracket, plus 6.2% social security and 1.45% Medicare. That 22% is a withholding rate and not a tax rate: if your marginal rate is 12% the difference comes back as refund, and if it is 32% you will owe more in April.

What actually comes off a bonus, and why the figure surprises people: federal income tax is withheld at a flat 22% whatever your bracket, and FICA and state tax follow. None of that is your tax rate — it is an instalment against a bill April settles.

Supplemental rate and FICA checked against IRS Publication 15 for 2026 2 September 2026 · How we check

BonusYour salaryUsed only to find your real bracket, for the comparison below.State rate %California 10.23%, New York 11.7%, Texas and Florida 0.Filing status

You take home

$7,035

$2,965 withheld, which is 29.6% — and none of it is your tax rate. A flat 22% of federal income tax comes off a bonus whatever bracket you are in.

Federal, supplemental rate: $2,200
Social security, 6.2%: $620
Medicare, 1.45%: $145
Total withheld: $2,965
Your actual bracket: 22%

Your bracket and the supplemental rate happen to match, so the withholding is about right.

Key facts

Federal supplemental rate: 22%
Above $1,000,000 a year: 37%
Social security: 6.2%
Medicare: 1.45%
State supplemental: 0% to 11.7%
Is it a tax rate?: No — withholding only

How withholding on a bonus works

The IRS calls a bonus a supplemental wage, along with commission, severance, back pay and accumulated leave. Publication 15 gives an employer two ways to withhold on one. The percentage method takes a flat 22%, and it is the one almost every payroll system uses because it needs nothing but the amount.

The aggregate method instead adds the bonus to that period’s regular pay and withholds as though you earned that much every period. On a monthly payroll a $10,000 bonus looks like $120,000 a year of extra income, so it withholds considerably more — and it comes back in April just the same.

Once supplemental wages pass $1,000,000 in a year, the excess must be withheld at 37%, the top marginal rate. That threshold is per employee per year, not per payment.

Worked example: a $10,000 bonus

$2,200 of federal income tax, $620 of social security and $145 of Medicare — $2,965 withheld in a state with no income tax, leaving $7,035. In California the same bonus loses another $1,023 to the state supplemental rate.

Somebody in the 12% bracket has had roughly $1,000 too much taken and will see it again as refund. Somebody in the 32% bracket has had $1,000 too little taken and owes it in April — which is the case worth knowing about, because nothing warns you.

When this does not apply

If your employer uses the aggregate method. The figure will be higher and depends on your regular pay and W-4, not on a flat rate.
A bonus paid with no regular wages in the period must use the aggregate method — the flat rate is only available when income tax has been withheld from ordinary wages in the current or prior year.
Non-cash bonuses. A gift card is a taxable wage at face value; genuinely trivial items may be a de minimis fringe benefit and untaxed.
Social security stops at the wage base. If your pay has already passed it this year, the 6.2% line is zero and the bonus keeps it.

Questions people actually ask

Why was my bonus taxed at 40%?: It was not taxed at 40% — that much was withheld. Federal income tax on a bonus comes off at a flat 22% under the percentage method, and social security, Medicare and state tax sit on top, which reaches 30-40% before any of it is settled. Your actual tax on the bonus is whatever your bracket turns out to be in April.
What is the bonus tax rate for 2026?: There is no bonus tax rate. Supplemental wages are withheld at a flat 22% federally, and at 37% on the part above $1,000,000 in a year. That is a withholding rule from Publication 15, not a rate of tax, and a bonus is ordinary income taxed at your ordinary rates.
Will I get some of it back?: If your marginal rate is below 22%, yes — the over-withholding comes back as refund. If it is above 22%, the opposite: too little was taken and the balance is due in April. The calculator prints both cases against the salary you enter.
What is the aggregate method?: The alternative your employer may use: the bonus is added to your regular pay for that period and withheld as though you earned that much every period. It usually withholds more than the flat 22% because a single large period looks like a much higher annual income. Neither method changes the tax; both change the timing.
Can I avoid the withholding?: Not on the bonus itself. What you can do is reduce the taxable amount before it is paid — deferring it into a 401(k) or an HSA up to the annual limit removes it from income tax, though social security and Medicare are still charged. Some employers allow a bonus-specific deferral election.

What to do next

Work out your real bracket on the income tax page and compare it with the 22% above. If your bracket is higher, set the difference aside now rather than meeting it in April; if it is lower, the over-withholding is an interest-free loan to the government you can end by adjusting your W-4 for the rest of the year.

Cite this page

APA: Rule Calculator. (2026). Bonus Tax Calculator. Rule Calculator. https://rulecalculators.com/bonus-tax
MLA: "Bonus Tax Calculator." Rule Calculator, September 2, 2026, https://rulecalculators.com/bonus-tax.
Chicago: Rule Calculator. "Bonus Tax Calculator." Rule Calculator. Last reviewed September 2, 2026. https://rulecalculators.com/bonus-tax.

The date is when the figures on this page were last checked against their source, not the day you opened it. Add your own access date if your style needs one.

Sources

Federal withholding only, plus a state rate you supply. An estimate, not tax advice.

Income tax, band by band Take-home pay Self-employment tax 401(k) growth Tax refund

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