Why does my bonus look like it's taxed at 40%?

Because of the IRS supplemental flat-rate withholding rule. Employers default to a 22% federal rate on bonuses (37% on amounts over $1M), plus 7.65% FICA, plus your state rate. That stacks to roughly 30-37% withheld — close to 40% in high-tax states. But this is the WITHHOLDING, not the actual tax owed. Your real federal tax on the bonus is your marginal bracket, which is usually 22-32%. The gap shows up as a refund at filing.

What's the formula for real tax on a bonus?

Real federal tax = federal_tax(salary + bonus) − federal_tax(salary alone). This pulls out the bonus's share of the federal bill at your true marginal rate. FICA and state are flat (same withheld and owed), so the gap is almost entirely a federal-withholding-vs-marginal mismatch.

When does the 37% rate apply?

On the cumulative supplemental wages above $1,000,000 in a calendar year. Most workers never see this. For executives or high-end RSU vests that exceed $1M cumulative, the first $1M is withheld at 22%, the rest at 37%. The calculator handles this split automatically when you enter a bonus over $1M.

What if my employer uses the 'aggregate' method instead?

Some employers add the bonus to the next regular paycheck and withhold using the W-4 method (treating the combined gross as if it were your normal pay frequency). This typically over-withholds even more than the 22% supplemental flat — same myth ('I'm taxed at 40%') but a different mechanism. The real tax is identical; only the withholding paperwork differs.

Is FICA really 7.65% on the whole bonus?

Yes, until you exceed the Social Security wage base ($181,000 in 2026). After that, only the 1.45% Medicare portion applies (plus 0.9% Additional Medicare above $200k single / $250k MFJ). The calculator assumes you're below the SS cap — for high earners receiving a bonus AFTER hitting $181k YTD wages, your FICA on the bonus is just 1.45% (Medicare-only) and your withholding is correspondingly lower.

What if my marginal rate exceeds 22%?

Then the 22% supplemental flat actually UNDER-withholds, and you'll owe more at filing. Common for workers in the 24%, 32%, or 35% brackets (single filers above ~$103k, ~$202k, or ~$257k taxable income for 2026). The calculator detects this case and surfaces a yellow warning verdict — set aside the gap before April so you're not surprised.

Does this apply to RSU vests?

Yes, RSUs are taxed as supplemental wages on the vest date. The same 22% federal flat rule applies (or 37% above $1M cumulative). High earners with large RSU vests typically see significant under-withholding because their marginal rate is well above 22%. The dedicated RSU Tax Calculator (also Phase I.2) handles this case in more depth.

Will the refund be exactly what the calculator shows?

Approximately, yes — the federal portion is exact (uses 2026 brackets). FICA and state are typically the same withheld and owed, so they net to zero in the delta. The slight variability in your actual refund comes from the rest of your tax return (other deductions, credits, other income sources). Use the delta as a working estimate, not a guaranteed refund amount.

Should I adjust my W-4 instead?

If you receive a large recurring bonus (signing bonus, annual performance bonus, regular RSU vests), it's often worth filing a new W-4 with extra withholding (Step 4c) to smooth the cash flow and avoid surprises. The calculator's 'gap' line tells you the dollar amount per bonus event — divide by remaining pay periods if you want to spread it.

What about state-level supplemental rates?

Many states have their own supplemental rates for bonuses (CA at 10.23%, NY at 11.7%, etc.). The calculator uses your single flat state rate input — for accuracy in a high-supplemental state, set the state rate to your supplemental rate rather than your effective rate. The federal logic is unchanged.

Can I save scenarios for multiple bonus events?

Yes — click Save under the result, name the scenario ("Annual bonus 2026," "Q4 RSU vest," "Year-end bonus") and store in your browser. Up to 5 saves per calculator. Useful for modeling the cumulative withholding gap across multiple bonus events in a year.

Is the supplemental flat rate the same in every year?

It has been 22% since 2018 (Tax Cuts and Jobs Act). The 37% rate above $1M tracks the top federal bracket (also unchanged at 37% since 2018). Both could change with future tax legislation; we'll update the calculator when they do.

Tax & DeductionsFree · No signup · 100K+/month

Bonus Tax Calculator (US 2026) — Why Your Bonus Isn't Really Taxed at 40%

Enter your salary + bonus + state. The calculator shows the supplemental flat withholding (22% federal) versus your real marginal tax — and tells you whether you'll get money back at filing or owe more.

Instant result
Private — nothing saved
Works on any device
AI insight included

Reviewed by CalcBold EditorialLast verified May 4, 2026Methodology

Withheld vs. real — side by side

The two columns show what the employer takes off the bonus check (supplemental flat) versus what you actually owe at filing (marginal). The gap is your refund — or the amount you’ll owe extra.

FilingBase salary ($)Bonus ($)State (%)

Withheld on paystub

Federal supplemental22% supplemental flat	$2,200
FICA (SS + Medicare)6.2% + 1.45% = 7.65%	$765
State	$500
Total withheld	$3,465

Real tax on bonus (marginal)

Federal (marginal)24.0% bracket	$2,366
FICA (same as withheld)	$765
State (same as withheld)	$500
Total real tax	$3,631

Withholding ≈ real tax

−$166

Withholding closely matches real tax — no notable refund or shortfall.

2026 federal brackets — your marginal rate is highlighted

Up to $12,225	10%
$12,225 – $49,700	12%
$49,700 – $105,950	22%	← supplemental flat rate
$105,950 – $202,300	24%	← bonus pushes you here
$202,300 – $256,800	32%

The IRS withholds 22% federal flaton bonuses regardless of your marginal bracket (37% on amounts over $1M). If your marginal rate is below 22%, you over-withhold and get money back. If it’s above 22%, you under-withhold and owe at filing.

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What This Calculator Does

The Bonus Tax Calculator answers the most-Googled bonus question in America: “Why does my bonus look like it was taxed at 40%?” The answer is that the headline withholding rate (22% federal supplemental + 7.65% FICA + state) is not the sameas your real tax. The IRS applies a flat 22% to ALL bonuses (37% above $1M), then settles up at filing based on your true marginal rate. This calculator surfaces that gap — and tells you whether you’ll get money back in April or owe extra.

Where most online bonus calculators just multiply your bonus by 22% and call it done, this one does the full marginal-vs-flat comparison: computes federal tax with the bonus included, subtracts federal tax without it, and shows the difference between what was withheld on your paystub and what you actually owe. Live recompute, share via URL, save scenarios.

The Math Behind the Myth

Two distinct things happen when a bonus hits your check:

Withholding — what disappears from the bonus before the deposit hits your bank. By default the IRS supplemental flat rule (Pub 15 § 7) applies 22% on the first $1M of supplemental wages and 37% on the rest. Plus FICA (7.65% combined SS + Medicare) and state (your rate).
Real tax — what you actually owe at filing. Computed at your marginal federal rate (the bracket the bonus pushes you into), not a flat 22%. FICA and state are flat and are the same number both withheld and owed.

That single subtraction extracts the bonus’s share of your federal bill at your true marginal rate — exactly what you owe at filing.

A Worked Example — “The $120k Engineer’s $10k Bonus”

Suppose you’re a single filer with a $120,000 base salary and you receive a $10,000 annual bonus. State rate 5%. Plug those in:

Withheld on paystub:
- Federal supplemental: 22% × $10,000 = $2,200
- FICA: 7.65% × $10,000 = $765
- State: 5% × $10,000 = $500
- Total withheld: $3,465
Real tax:
- Taxable income (single 2026): $120k − $15,750 std = $104,250 → 22% bracket
- Bonus pushes taxable to $114,250 → still in the 22% bracket
- Real federal tax on bonus = 22% × $10,000 = $2,200
- FICA: $765, state: $500
- Total real tax: $3,465
Delta: $3,465 withheld − $3,465 real = $0

Same number both ways — because the user’s marginal bracket (22%) happens to match the supplemental flat rate (also 22%). The myth doesn’t fire here. But change the inputs:

High earner case — “$220k base, $50k bonus”

Withheld federal: 22% × $50,000 = $11,000
Bonus pushes taxable income from $204k to $254k → bonus straddles the 24% and 32% brackets
Real federal tax on bonus ≈ $13,300 (mostly 24%, some 32%)
Delta: $11,000 withheld − $13,300 real = −$2,300 under-withheld

High earners are silently UNDER-withheld on their bonuses. The 22% supplemental flat is below their marginal rate, and the gap shows up as a surprise April balance. The calculator surfaces this with a yellow warning verdict.

Low/mid earner case — “$60k base, $5k bonus”

Withheld federal: 22% × $5,000 = $1,100
Marginal bracket: 12% (single, $60k base − $15,750 std = $44,250 taxable)
Real federal tax on bonus = 12% × $5,000 = $600
Delta: $1,100 withheld − $600 real = +$500 refund

Low/mid earners over-withhold and get money back at filing. This is why most TurboTax users with normal bonuses see a small refund — the IRS flat 22% over-collects relative to their marginal 12% bracket.

Reading the Side-by-Side Panel

Below the verdict, the breakdown panel renders two columns:

Withheld on paystub (left): federal supplemental, FICA, state, total. Same number that disappears from your bonus check.
Real tax (marginal) (right, tax-color highlighted): federal at marginal rate, FICA (same), state (same), total. Same number you actually owe at filing for the bonus portion of your income.

Below the columns, the delta callout is green (refund) or yellow (under-withheld) with the dollar amount and an explanation. Below that, the 2026 federal bracket reference table shows your marginal rate highlighted — useful for sanity-checking the calc against published IRS bracket data.

When the 37% Rate Applies

The IRS uses a higher 37% supplemental rate above $1M in cumulative supplemental wages within a single calendar year. Most workers never see this. For executives or large RSU vest recipients, the first $1M is withheld at 22% and the excess at 37% — the calculator handles this split automatically when you enter a bonus over $1M.

Note: it’s the cumulativetotal within the year, not per-event. If you got a $600k bonus in March and a $500k RSU vest in October, the second event spans the threshold — the first $400k of the October vest is at 22%, the remaining $100k at 37%. Employers’ payroll systems usually handle this correctly, but it’s worth verifying on the YTD line of your last paystub.

What About the Aggregate Method?

Some employers use the “aggregate method” instead of the supplemental flat: they add the bonus to your next regular paycheck and withhold using your W-4 + the standard payroll formula (treating the combined gross as if it were a normal pay period). This usually OVER-withholds even more than the 22% flat — common complaint about the “my paycheck disappeared this month.”

The real tax is identical either way; only the withholding paperwork differs. Aggregate-method employers tend to produce bigger April refunds because they over-withhold per event. The calculator models the supplemental flat (the most common method) but the real-tax math doesn’t change between them.

Should I Adjust My W-4?

If you receive a recurring bonus stream — annual performance bonus, RSU quarterly vest, regular sales commission — and the calculator consistently shows a non-trivial gap (positive or negative), it’s worth adjusting your W-4:

If gap is positive (over-withheld): use Step 4b (deductions) to claim more deductions, lowering withholding. Or accept the over-withholding as forced savings — many people prefer a guaranteed April refund to a tighter monthly cash flow.
If gap is negative (under-withheld): use Step 4c (extra withholding) to add a flat dollar amount per pay period. Divide the annual gap by remaining pay periods to get the right per-period number. Submitting a new W-4 takes 5 minutes via your HR portal.

For one-time bonuses (signing bonus, special spot bonus), the W-4 adjustment isn’t worth the paperwork — just save the gap amount and settle at filing.

Common Misconceptions

“My bonus was taxed at 40%.” No, it was withheld at ~30-37% (22% federal + 7.65% FICA + state) — the real tax is your marginal rate. The gap shows up as a refund.
“Bonuses have a special tax rate.” Withholding has a special flat rate (22%/37%); the actual tax on the bonus is at your marginal rate, identical to wages.
“My RSU vest got hammered by taxes.” Same mechanism as a bonus — RSUs are supplemental wages, taxed at 22% supplemental flat + FICA + state on the vest date. High-bracket earners are routinely under-withheld and need to set aside the gap.
“I should ask for the bonus as a regular raise.”The total tax you owe on $X of bonus equals the tax you’d owe on $X of regular salary. The difference is purely cash-flow timing — bonus = lump withholding now, true-up at filing; salary = smoother withholding over the year.

Save and Share

Click Saveunder the result to name the scenario (“Annual bonus 2026,” “Q4 RSU vest,” “Year-end performance”) and store it in your browser. Up to 5 saves per calculator. Useful for tracking the cumulative withholding gap across multiple bonus events in a year — sum the gaps to know how much to set aside for April.

Click Share to copy a URL with your inputs encoded. Useful for sending the exact scenario to your accountant or spouse for cash-flow planning.

Related Tools

Raise Impact Calculator — for a permanent salary raise (not a one-time bonus), shows net annual increase + per-paycheck delta after taxes.
Take-Home Pay Calculator — full pre-tax-deferred net (US/UK/IN), with 401(k), HSA, and state tax modeled. Useful for the post-bonus “what’s my new effective monthly?” question.
Quarterly Estimated Tax Calculator — if you’re under-withheld on bonuses AND have 1099 income, this calc computes the per-quarter top-up needed to avoid the underpayment penalty.
Tax Calculator— the general federal income tax estimator. Useful for the broader “what’s my total tax bill?” question, of which bonus tax is one slice.

How to Read the Verdict

The number to focus on is the delta — withheld minus real tax. A green delta is a refund coming; a yellow delta is a balance due in April. The size of the delta, not its direction, is the action threshold.

Delta within ±$300. Ignore it. The supplemental flat 22% landed close to your marginal rate; standard refund season will square it up.
Delta between −$300 and −$2,000 (under-withheld). Set the gap aside in a HYSA before April. One-time bonus — don’t bother with a W-4 change.
Delta below −$2,000 (chronic under-withholding). File a new W-4 with extra Step 4c withholding to spread the gap across remaining pay periods. Common for FAANG-tier RSU vests.
Delta above +$2,000 (chronic over-withholding). Use W-4 Step 4b deductions to free up monthly cash flow — or treat it as forced savings if you prefer the April refund.

Frequently Asked Questions

The most common questions we get about this calculator — each answer is kept under 60 words so you can scan.

Why does my bonus look like it's taxed at 40%?
Because of the IRS supplemental flat-rate withholding rule. Employers default to a 22% federal rate on bonuses (37% on amounts over $1M), plus 7.65% FICA, plus your state rate. That stacks to roughly 30-37% withheld — close to 40% in high-tax states. But this is the WITHHOLDING, not the actual tax owed. Your real federal tax on the bonus is your marginal bracket, which is usually 22-32%. The gap shows up as a refund at filing.
What's the formula for real tax on a bonus?
Real federal tax = federal_tax(salary + bonus) − federal_tax(salary alone). This pulls out the bonus's share of the federal bill at your true marginal rate. FICA and state are flat (same withheld and owed), so the gap is almost entirely a federal-withholding-vs-marginal mismatch.
When does the 37% rate apply?
On the cumulative supplemental wages above $1,000,000 in a calendar year. Most workers never see this. For executives or high-end RSU vests that exceed $1M cumulative, the first $1M is withheld at 22%, the rest at 37%. The calculator handles this split automatically when you enter a bonus over $1M.
What if my employer uses the 'aggregate' method instead?
Some employers add the bonus to the next regular paycheck and withhold using the W-4 method (treating the combined gross as if it were your normal pay frequency). This typically over-withholds even more than the 22% supplemental flat — same myth ('I'm taxed at 40%') but a different mechanism. The real tax is identical; only the withholding paperwork differs.
Is FICA really 7.65% on the whole bonus?
Yes, until you exceed the Social Security wage base ($181,000 in 2026). After that, only the 1.45% Medicare portion applies (plus 0.9% Additional Medicare above $200k single / $250k MFJ). The calculator assumes you're below the SS cap — for high earners receiving a bonus AFTER hitting $181k YTD wages, your FICA on the bonus is just 1.45% (Medicare-only) and your withholding is correspondingly lower.
What if my marginal rate exceeds 22%?
Then the 22% supplemental flat actually UNDER-withholds, and you'll owe more at filing. Common for workers in the 24%, 32%, or 35% brackets (single filers above ~$103k, ~$202k, or ~$257k taxable income for 2026). The calculator detects this case and surfaces a yellow warning verdict — set aside the gap before April so you're not surprised.
Does this apply to RSU vests?
Yes, RSUs are taxed as supplemental wages on the vest date. The same 22% federal flat rule applies (or 37% above $1M cumulative). High earners with large RSU vests typically see significant under-withholding because their marginal rate is well above 22%. The dedicated RSU Tax Calculator (also Phase I.2) handles this case in more depth.
Will the refund be exactly what the calculator shows?
Approximately, yes — the federal portion is exact (uses 2026 brackets). FICA and state are typically the same withheld and owed, so they net to zero in the delta. The slight variability in your actual refund comes from the rest of your tax return (other deductions, credits, other income sources). Use the delta as a working estimate, not a guaranteed refund amount.
Should I adjust my W-4 instead?
If you receive a large recurring bonus (signing bonus, annual performance bonus, regular RSU vests), it's often worth filing a new W-4 with extra withholding (Step 4c) to smooth the cash flow and avoid surprises. The calculator's 'gap' line tells you the dollar amount per bonus event — divide by remaining pay periods if you want to spread it.
What about state-level supplemental rates?
Many states have their own supplemental rates for bonuses (CA at 10.23%, NY at 11.7%, etc.). The calculator uses your single flat state rate input — for accuracy in a high-supplemental state, set the state rate to your supplemental rate rather than your effective rate. The federal logic is unchanged.
Can I save scenarios for multiple bonus events?
Yes — click Save under the result, name the scenario ("Annual bonus 2026," "Q4 RSU vest," "Year-end bonus") and store in your browser. Up to 5 saves per calculator. Useful for modeling the cumulative withholding gap across multiple bonus events in a year.
Is the supplemental flat rate the same in every year?
It has been 22% since 2018 (Tax Cuts and Jobs Act). The 37% rate above $1M tracks the top federal bracket (also unchanged at 37% since 2018). Both could change with future tax legislation; we'll update the calculator when they do.