Bonus Tax Rate 22% — Why Your Bonus Feels Like It's Taxed More
"They took 22% of my bonus!" is one of the most common payroll complaints. But 22% isn't your actual tax rate on bonuses — it's just the federal withholding rate the IRS requires for supplemental wages. Your real tax rate could be lower (you'll get a refund) or higher (you'll owe more at filing). The 22% is just an estimate.
See your actual bonus after all taxes with the Bonus Tax Calculator.
The 22% Is Withholding, Not Tax
| Term | What It Means |
|---|---|
| Withholding rate (22%) | The amount your employer takes out of your bonus and sends to the IRS as a prepayment |
| Marginal tax rate | Your actual federal income tax rate based on your total income and bracket |
| Effective tax rate | Your average rate across all income (lower than marginal) |
Think of withholding as a deposit. At tax time, if the deposit (22%) exceeds what you actually owe, you get the excess back as a refund. If it's less, you pay the difference.
Your Real Bonus Tax Rate by Income
| Your Total Income (including bonus) | Marginal Rate | 22% Withholding vs Actual |
|---|---|---|
| Under $11,925 | 10% | Over-withheld — refund coming |
| $11,926–$48,475 | 12% | Over-withheld — refund coming |
| $48,476–$103,350 | 22% | Almost exactly right |
| $103,351–$197,300 | 24% | Slightly under-withheld |
| $197,301–$250,525 | 32% | Under-withheld by 10% |
| $250,526–$626,350 | 35% | Under-withheld by 13% |
| Over $626,350 | 37% | Under-withheld by 15% |
If your salary is $55,000 and you get a $5,000 bonus, your total income is $60,000. Your marginal rate on the bonus is 22%, so the withholding is spot-on. But if your salary is $40,000 and you get a $3,000 bonus, you're in the 12% bracket — the 22% withholding takes nearly double what you owe.
The FICA Taxes on Top
The 22% is just federal income tax withholding. FICA taxes (Social Security + Medicare) are additional:
| Tax | Rate | Note |
|---|---|---|
| Federal withholding | 22% | Prepayment; may be refunded/owed |
| Social Security | 6.2% | Stops at $176,100 wage base (2026) |
| Medicare | 1.45% | No cap |
| Additional Medicare | 0.9% | On income over $200,000 |
| Minimum total | 29.65% | Before state taxes |
FICA taxes are not refundable (except if total wages exceed the Social Security wage base and you have multiple employers). So even if your income tax refund returns some of the 22%, you never get the 7.65% FICA back.
Why the IRS Uses 22%
The 22% rate is a compromise. The IRS needs a simple, uniform rate that employers can apply without knowing each employee's full tax situation. At 22%, it:
- Approximately matches the median taxpayer's marginal rate
- Is slightly high for lower earners (leading to refunds)
- Is slightly low for higher earners (leading to balance due)
- Is simple to calculate (one rate, no bracket tables needed)
Before the Tax Cuts and Jobs Act (2018), the supplemental withholding rate was 25%. It was lowered to 22% to match the new bracket structure.
What You Can Do About It
If you're over-withheld (lower bracket): Adjust your W-4 to reduce withholding on regular paychecks, effectively "making up" for the excess withholding on the bonus. Or just wait for the refund.
If you're under-withheld (higher bracket): Either adjust your W-4 to withhold extra throughout the year (Line 4(c)), make estimated tax payments, or set aside the difference yourself.
If you want a larger take-home bonus: Ask your employer if you can time the bonus for early January (defers the tax liability) or split it across pay periods (though this uses the aggregate method, which may actually withhold more).
For a detailed breakdown of both withholding methods, see Aggregate vs Percentage Method. For strategies to keep more, read How to Reduce Tax on Your Bonus. And for how bonuses work in the bigger picture, check How Bonuses Are Taxed in 2026.
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