How Is a Bonus Taxed? The Truth Behind the 22% Myth
Your bonus check probably had way more withheld than your regular paycheck. Here's the good news: that 22% isn't necessarily what you actually owe.
The myth: "bonuses are taxed at 22%"
It's one of the most repeated pieces of misinformation about paychecks: the idea that bonuses face some special, higher, permanent tax rate. In reality, there is no separate "bonus tax." A bonus is just ordinary income, and it's ultimately taxed at exactly the same federal marginal rates as the rest of your salary — 10%, 12%, 22%, 24%, and so on, based on your total taxable income for the year.
The 22% figure people cite is real, but it's something different: it's the IRS-mandated flat withholding rate that employers commonly use when they pay out a bonus — not your actual tax bracket. Withholding and final tax liability are two different things, and the gap between them is exactly why bonus checks so often confuse people.
How employers actually withhold bonus tax
The IRS gives employers two options for withholding tax on a bonus (technically called a "supplemental wage"):
- The percentage method: Withhold a flat 22% for federal tax (37% on any amount over $1 million in a year), regardless of your actual income level. This is by far the most common method, mainly because it's simple for payroll systems to apply.
- The aggregate method: Add the bonus to your most recent regular paycheck and withhold as if that combined amount were your normal pay for the period, using standard withholding tables. This usually withholds more for high earners and can sometimes withhold less for lower earners.
Most employers default to the flat 22% percentage method because it's easier to administer — which is also exactly why the "22% bonus tax" myth persists.
What actually happens at tax filing time
Here's the part that surprises people: your bonus and your regular salary get combined into one number — your total taxable income for the year — and taxed together using the normal marginal bracket system. The 22% withheld from your bonus check was simply an upfront estimate. When you file your return, the IRS calculates what you actually owed on every dollar you earned, bonus included, and compares that to everything that was withheld all year.
If the flat 22% withholding turned out to be more than your actual marginal rate on that portion of income, you get the difference back as a larger refund (or a smaller bill). If it was less than your actual marginal rate, you'll owe the difference when you file.
Worked example 1: when 22% withholds too much
A single filer earning a $60,000 salary receives a $10,000 bonus in December. Their salary alone puts most of their income in the 12% bracket, with the bonus pushing a portion into the 22% bracket.
| Item | Amount |
|---|---|
| Actual federal tax owed on the $10,000 bonus (blended across brackets) | ≈ $1,985 |
| Federal tax withheld at the flat 22% rate | $2,200 |
| Result: refunded at tax time | ≈ $215 |
In this case, the flat withholding was slightly too aggressive — the employee gets that extra $215 back as part of their refund.
Worked example 2: when 22% withholds too little
A single filer with $200,000 in taxable income (already well into the 32% bracket) receives the same $10,000 bonus. This time, the bonus is taxed at a much higher marginal rate than the flat withholding assumes.
| Item | Amount |
|---|---|
| Actual federal tax owed on the $10,000 bonus (32% bracket) | ≈ $2,644 |
| Federal tax withheld at the flat 22% rate | $2,200 |
| Result: owed at tax time | ≈ $444 |
Here, the flat 22% withholding wasn't nearly enough, since this earner's real marginal rate on that income is 32%. This is the scenario that catches higher earners off guard — the bonus check felt like it was taxed heavily, but it was actually under-withheld relative to their real bracket.
The pattern: it depends on your bracket, not the bonus
The rule of thumb: if your marginal federal tax rate is below 22% (roughly under $47,150 in taxable income for single filers in 2026), flat withholding likely takes out more than you'll actually owe on the bonus, and you'll see some of it back at tax time. If your marginal rate is above 22% (roughly above $100,525 in taxable income), flat withholding likely isn't enough, and you should expect to owe more when you file — worth setting aside extra from the bonus itself if you know you're in this position.
Frequently asked questions
Run your own numbers
The examples above use round figures, but your actual withholding and final tax liability depend on your total income, filing status, deductions, and state. Use these calculators to see where you stand: