Bonus Withholding Methods — Percentage vs Aggregate Explained

When you receive a bonus, your employer chooses one of two IRS-approved withholding methods: percentage or aggregate. The percentage method takes a flat 22%. The aggregate method combines your bonus with your regular pay and calculates withholding as if the combined amount were your normal salary. The aggregate method almost always withholds more — sometimes significantly more.

Compare both methods for your situation with the Bonus Tax Calculator.

The Two Methods at a Glance

Feature	Percentage Method	Aggregate Method
How it works	Flat 22% on the bonus	Adds bonus to regular pay, withholds based on combined amount
Complexity	Simple	More complex
Typical withholding	Moderate	Often higher
When used	Bonus on separate check	Bonus combined with regular paycheck
Employee choice?	No — employer decides	No — employer decides

Percentage Method Example

You earn $3,500 biweekly and receive a $10,000 bonus on a separate check.

Tax	Rate	Withheld
Federal income tax	22% flat	$2,200
Social Security	6.2%	$620
Medicare	1.45%	$145
Total federal withholding		$2,965
Net bonus		$7,035

Straightforward: 22% plus FICA.

Aggregate Method Example

Same scenario: $3,500 biweekly regular pay, $10,000 bonus on the same paycheck.

Step	Calculation
Regular pay this period	$3,500
Plus bonus	$10,000
Combined pay this period	$13,500
Annualized combined (× 26 pay periods)	$351,000
Federal tax on $351,000 annual income	~$75,300
Tax per pay period (÷ 26)	~$2,896
Minus regular withholding this period	-$450
Additional withholding on bonus	~$2,446

Wait — that's less than the percentage method's $2,200? Not necessarily. The aggregate method's result depends heavily on your pay frequency and regular withholding. For many employees, the annualization pushes the calculation into a higher bracket, resulting in higher withholding than the 22% flat rate.

When Aggregate Withholds More

Your Salary	Bonus	% Method Withheld	Aggregate Withheld	Difference
$40,000/yr	$5,000	$1,100	~$1,100	~Same
$60,000/yr	$10,000	$2,200	~$2,400	+$200
$80,000/yr	$15,000	$3,300	~$3,900	+$600
$100,000/yr	$20,000	$4,400	~$5,600	+$1,200
$150,000/yr	$30,000	$6,600	~$9,000	+$2,400

The aggregate method penalizes larger bonuses more because it annualizes the combined amount, pushing you into a higher bracket for the entire pay period.

Which Method Do You Want?

Situation	Better Method	Why
Lower-income employee	Either — similar result	Both over-withhold slightly
Middle-income, moderate bonus	Percentage	Aggregate may over-withhold
High-income, large bonus	Depends	Percentage may under-withhold (22% < actual rate)
Want predictable withholding	Percentage	Flat 22% is easy to calculate
Want closer-to-actual withholding	Depends on bracket	Aggregate may be more accurate at higher incomes

You can't choose — your employer's payroll system determines the method. But you can ask your payroll department which method they use, so you can plan accordingly.

Getting the Extra Withholding Back

Regardless of which method your employer uses, your actual tax liability is calculated when you file your annual return. If either method withheld too much, you get a refund. If it withheld too little, you owe the difference.

The practical impact: the aggregate method may temporarily take more from your bonus paycheck, but it's corrected at tax time. It's a cash flow issue, not a tax issue.

For the full overview of bonus taxation, see How Bonuses Are Taxed in 2026. For strategies to offset the hit, read How to Reduce Tax on Your Bonus. And for year-end planning, check Year-End Bonus Tax Planning.