At a glance
Quick answer
A bonus does not have a special final federal tax rate. This calculator separates a modeled flat supplemental federal income tax withholding method from the modeled change in annual federal income tax. It also shows incremental employee payroll tax liability and the total modeled federal burden. That distinction answers the practical question behind most bonus searches without mixing income tax withholding with Social Security and Medicare. The comparison covers a W-2 cash bonus. Equity compensation, state withholding, benefit deductions, AMT preference items, and compensation classification can require separate work.
How the calculation works
Calculate annual liability twice
The first scenario computes supported federal amounts using the employee's other annual wages and spouse wages when married filing jointly. The second adds the employee's bonus and reruns the annual calculation. Incremental federal income tax is the second federal income tax amount minus the first. Employee Social Security, regular Medicare, and Additional Medicare liability are calculated separately as payroll tax. The two parts are then combined as the total modeled federal burden. The basic standard deduction is assumed, with zero adjustments to income, itemized deductions, Schedule 1-A deductions, and dependent credits unless modeled. Because ordinary brackets are progressive, the income tax change depends on filing status, entered wages, and tax year. It is not obtained by multiplying the bonus by the employee's average tax rate.
Compare income tax with Publication 15 withholding
For separately identified supplemental wages, Publication 15 permits the 22% flat federal income tax withholding method only when income tax was withheld from regular wages in the current or immediately preceding calendar year. If that condition is not met, the employer must use the aggregate method. The aggregate method is not modeled. Once supplemental wages paid by the employer and businesses under common control exceed $1 million in the calendar year, the excess is subject to 37% withholding. Withholding is a prepayment. The income tax withholding gap compares incremental federal income tax with the modeled flat method amount.
Check high earner interactions before spending the net
A bonus can cross an ordinary bracket, the $200,000 employer Additional Medicare withholding point, the filing status Additional Medicare liability threshold, or an AMT sensitive fact not modeled here. Employer Additional Medicare withholding uses wages paid to one employee and ignores filing status, while return liability can use combined spouse wages and the selected filing status. The displayed payroll amount is annual employee liability, not a pay statement withholding forecast. The result does not complete Form 6251 and does not estimate state or local bonus tax.
Plan the cash gap instead of guessing from the pay stub
In the worked example, incremental federal income tax is $2,400 and supplemental federal income tax withholding is $2,200, leaving a $200 income tax gap. Incremental employee payroll tax adds another $235, so the total modeled federal burden is $2,635. The $200 comparison equals 2% of the $10,000 gross bonus, but that percentage is specific to this scenario and should not become a shortcut. A lower base salary, joint return, pretax contribution, or larger bonus can change the occupied brackets. Reconcile the year to date pay statement, prior supplemental wages, and expected annual income before changing a W-4 or estimated payment.
2025 and 2026 values
Tax year 2025
2025 final bonus rules
The 2025 flat method example uses 22% through $1,000,000 of supplemental wages and mandatory 37% withholding on the excess. Annual liability uses final 2025 Form 1040 rules, including the revised $15,750 single standard deduction and the 24% bracket above $103,350.
Tax year 2026
2026 planning bonus rules
The 2026 planning comparison retains the conditional 22% flat method and mandatory 37% excess withholding while applying Revenue Procedure 2025-32. The single standard deduction is $16,100 and $105,700 is the top of the single 22% bracket.
Recalculate it yourself
Worked example
$10,000 bonus after $200,000 base wages
A single employee has $200,000 base wages, receives a $10,000 separately identified bonus, and has no prior supplemental wages in 2025.
- Modeled Publication 15 flat method withholding = $10,000 × 22% = $2,200.
- Incremental federal income tax = income tax at $210,000 − income tax at $200,000 = $2,400.
- Incremental employee payroll tax = payroll tax at $210,000 − payroll tax at $200,000 = $235.
- Income tax withholding gap = $2,400 income tax − $2,200 supplemental withholding = $200.
- Total modeled federal burden = $2,400 income tax + $235 payroll tax = $2,635.
- Estimated net bonus after the total modeled burden = $10,000 − $2,635 = $7,365.
Result
Modeled flat federal income tax withholding is $2,200 and incremental federal income tax is $2,400, leaving a $200 income tax gap. Another $235 of incremental employee payroll tax liability brings the total modeled federal burden to $2,635 and the estimated net bonus to $7,365.
What is included
- Employee base wages, joint spouse wages, bonus amount, prior employer group supplemental wages, filing status, selected year, incremental federal income tax, employee payroll tax liability, total modeled federal burden, flat method withholding, and the income tax withholding gap.
- The approved $2,200 withholding, $2,400 income tax, $235 payroll tax, $200 income tax gap, $2,635 total burden, and $7,365 net bonus example.
What is not included
- State and local withholding, benefits, equity compensation, deferred compensation, AMT calculation, the aggregate withholding method, and employer payroll processing.
- The basic standard deduction is assumed, with zero adjustments to income, itemized deductions, Schedule 1-A deductions, and dependent credits unless modeled.
- Net Investment Income Tax, federal tax credits, other income, employer Social Security and Additional Medicare withholding reconciliation, multiple employer payroll details, and final characterization of a payment as supplemental wages.
Common mistakes
Calling 22% the bonus tax rate
Twenty-two percent is a permitted withholding method in the stated circumstances. Final liability follows the annual return and can be higher or lower.
Ignoring earlier supplemental payments
Prior bonuses can affect whether the $1 million threshold and excess rate matter. Enter current year supplemental wages paid by the employer and businesses under common control consistently with payroll records.
Mixing payroll tax into the income tax gap
Supplemental federal income tax withholding must be compared with incremental federal income tax. Employee payroll tax liability appears separately before both amounts are combined into the total modeled burden. Actual employer payroll withholding can differ.
Threshold screen only
Alternative Minimum Tax boundary
This calculator does not complete Form 6251. Large deductions, incentive stock options, and other preference items can make a regular federal estimate differ from AMT. Use the high earner guide and the cited IRS instructions before treating a result as complete.
Frequently asked questions
What does the Bonus tax calculator compare?
It shows incremental federal income tax, employee payroll tax liability, total modeled federal burden, and the income tax gap after a modeled flat supplemental withholding amount.
Is a bonus subject to a special final federal tax rate?
No. Supplemental withholding is a collection method, not a separate final tax rate. Your final federal liability depends on total annual income and filing details.
Does the bonus estimate include every payroll deduction?
No. The focused result does not model state tax, local tax, benefits, retirement contributions, or every employer payroll adjustment that may affect the payment.
Primary sources
- 2025 Instructions for Form 1040, opens in a new tab
Reviewed 2026-07-25
- IRS Revenue Procedure 2024-40, opens in a new tab
Reviewed 2026-07-25
- IRS Revenue Procedure 2025-32, opens in a new tab
Reviewed 2026-07-25
- IRS Publication 15 (Circular E), Employer's Tax Guide for 2025, opens in a new tab
Reviewed 2026-07-25
- IRS Publication 15 (Circular E), Employer's Tax Guide for 2026, opens in a new tab
Reviewed 2026-07-25
- IRS Questions and answers for the Additional Medicare Tax, opens in a new tab
Reviewed 2026-07-25
- IRS Topic 751, Social Security and Medicare withholding rates, opens in a new tab
Reviewed 2026-07-25
- Social Security 2025 cost-of-living adjustment facts, opens in a new tab
Reviewed 2026-07-25
- Social Security 2026 cost-of-living adjustment facts, opens in a new tab
Reviewed 2026-07-25
- Public Law 119-21, opens in a new tab
Reviewed 2026-07-24