Last Updated: April 2026
You've earned a bonus — but how much of it do you actually keep? The answer depends on federal supplemental withholding (22% or 37%), your state's bonus withholding method, and your total year income. This guide explains how bonuses are taxed both federally and by state, which states take the most from a bonus, and what you can expect to receive after all taxes.
The federal government taxes bonuses in two ways depending on how your employer handles it:
Employers withhold 22% on supplemental wages (bonuses, commissions, prizes) up to $1M total supplemental wages per year. Above $1M in supplemental wages: 37% flat. This is just withholding — your final tax is determined when you file your annual return based on your total income and marginal bracket.
Some employers add the bonus to your most recent regular paycheck, calculate withholding on the combined amount, then subtract what was already withheld. This can result in higher withholding if the combined amount pushes you into a higher bracket for that pay period.
If your federal marginal rate is 24% and your employer withheld 22%, you'll owe an additional 2% when you file. If your marginal rate is 32% and 22% was withheld, you owe 10% more at filing. For those in the 10–22% bracket, the 22% withholding may actually exceed your real liability — resulting in a refund.
| Annual Income (Single) | Federal Marginal Rate | Withholding Rate | Result at Filing |
|---|---|---|---|
| Under $47,150 | 12% | 22% | Refund (overpaid by 10%) |
| $47,151–$100,525 | 22% | 22% | Break even |
| $100,526–$191,950 | 24% | 22% | Owe additional 2% |
| $191,951–$243,725 | 32% | 22% | Owe additional 10% |
| $243,726–$609,350 | 35% | 22% | Owe additional 13% |
| Above $609,350 | 37% | 22% (or 37% if >$1M) | Owe additional 15% |
State bonus tax withholding varies by state:
Most states apply the same withholding method to bonuses as to regular wages — annualising the bonus and withholding at the resulting rate. This typically results in high withholding for large bonuses (since annualising a bonus makes it look like very high annual income in the withholding calculation).
A California high earner receiving a $100,000 bonus: 22% federal + 10.23% California = 32.23% withheld. If their federal marginal rate is 37% and California marginal rate is 13.3%: actual tax is 50.3% — roughly $50,300 owed on the $100,000 bonus, with $32,230 withheld and ~$18,000 owed at filing.
You cannot change the tax rate on a bonus — it's ordinary income taxed at your marginal rate. However, you can:
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Large bonus income, stock options, and deferred compensation create tax complexity that benefits from expert planning. A CPA can model your total tax liability, recommend withholding adjustments, and identify deductions to reduce your bonus tax bill.
⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.
Get Matched With a CPA →Employers typically withhold 22% federal supplemental tax on bonuses plus state supplemental rates. If your employer uses the aggregate method instead, they may have annualised the bonus (treating it as if you earn it every pay period), which can push the withholding into a higher bracket. Most people see their bonus withholding as excessive because the 22% federal rate exceeds their actual marginal rate (if they're in the 12% or 22% bracket), resulting in a tax refund. For high earners in the 32–37% bracket, the 22% withholding is actually too low — they'll owe additional tax at filing.
It depends on your total income and state. Rough estimate for different scenarios: (1) Texas, income $100K total: federal ~$11,000 (22% withheld; 24% marginal) + $0 state = ~$39,000 take-home. (2) California, income $150K total: federal ~$12,500 + California ~$5,115 (10.23% withheld; 12.3% actual marginal) = ~$17,600 withheld; actual liability higher — take-home roughly $32,000–$34,000. (3) New York City, income $300K total: federal ~$14,000 + NY state ~$4,500 + NYC ~$1,938 = ~$20,400 withheld; take-home roughly $29,000–$31,000. Use our tax calculator for a precise estimate based on your specific income and state.
From a withholding perspective, yes — employers use a flat 22% federal supplemental rate on bonuses rather than the payroll withholding table method used for regular wages. But from a final tax liability perspective, no — a bonus is ordinary income taxed at your marginal rate, exactly the same as salary. The difference is only in the withholding mechanism. If you receive a $30,000 bonus and $30,000 in equivalent salary spread across the year, your final tax bill is identical. The supplemental withholding rate may cause you to overpay or underpay during the year, reconciled when you file.