A bonus check that looks a lot smaller than expected is one of the most common year-end payroll surprises. The short answer: bonuses are "supplemental wages" under IRS rules, and employers are allowed to withhold them at a flat rate that's often higher than what gets taken out of a regular paycheck -- but that flat rate is not the same thing as your actual tax bill.
Why was my bonus taxed so much?
When a bonus is paid separately from your regular paycheck, employers commonly use the IRS's flat supplemental-wage rate: 22% federal withholding on the bonus, no matter what tax bracket you're actually in. If your regular paycheck withholding is lower than 22% because you're in a lower bracket, the bonus can feel disproportionately taxed even though nothing "extra" is actually owed.
Bonus tax rate 2026, 22 percent explained (and the 37% above $1M)
IRS Publication 15 confirms the 2026 flat supplemental-wage withholding rate stays at 22% for bonuses up to $1,000,000 paid by one employer in a calendar year, and 37% on any amount above that threshold. The One Big Beautiful Bill Act (P.L. 119-21, enacted July 2025) permanently extended the individual tax rates from the 2017 tax law that this withholding structure is tied to, which is why the 22%/37% split carries into 2026 rather than changing.
Is bonus withholding my final tax?
No -- and this is the part that gets buried in most bonus calculators. The 22% (or 37%) withheld from your bonus is just an upfront estimate. Your actual tax liability is calculated when you file your return, based on your total annual income and marginal bracket. If your real bracket is lower than 22%, you'll likely get some of it back as a refund; if it's higher, you may owe more at filing time.
A bonus withholding calculator built for employees, not payroll admins
Most bonus tax calculators online are payroll tools -- they ask for year-to-date gross pay, state selection, FICA exemption status, and 401(k)/HSA deductions, which is more than an employee checking "what will I actually take home" usually wants to enter. The Year-End Bonus Tax Withholding Calculator only asks for your bonus amount (and optionally your year-to-date supplemental wages, to check the $1M threshold), and always shows the withholding-vs-final-tax distinction on screen, not buried in a footnote.
Try the Year-End Bonus Tax Withholding Calculator →
Sources: IRS Publication 15 (Circular E), 2026; Congress.gov CRS Report R48611 on P.L. 119-21 tax provisions; PayrollOrg "One Big Beautiful Bill Act" compliance summary.