Bonus Tax Withholding
Your bonus arrived smaller than promised, and the stub says something like 22% — or, worse, much more — went to taxes. Here is what actually happened: the 22% is a withholding shortcut, not a tax rate. Bonuses are ordinary income taxed at your normal marginal rate at filing time; 22% is simply the flat rate employers use for supplemental wages. Whether that left you over- or under-withheld depends on your bracket, and both directions are fixable. The withholding calculator has a dedicated bonus mode that computes the exact fix.
Supplemental wages — bonuses, commissions, equity payouts — may be withheld at a flat 22%. Your real marginal rate is either below or above that:
- Below 22% (lower brackets): too much was withheld on the bonus. The excess comes back as a refund — but only after you file, unless you adjust.
- Above 22% (24% bracket and up): too little was withheld, and the shortfall lands on your April bill.
Community-documented scale for the fix: a filer over-withheld on a bonus trued up with just $100 in W-4 Step 3; a higher earner in the 24% bracket needed only a dollar per paycheck in Step 4c to close the gap. Small levers, precisely aimed, beat ignoring it for a year.
Over-withheld? Reduce withholding for the rest of the year. Add the excess to Step 3 (annual dollars) — paychecks get bigger immediately and the bonus over-collection washes out by December.
Under-withheld? Add per-paycheck withholding. Step 4c is per paycheck, so divide the expected shortfall by remaining paychecks. Remember the unit: Step 4c dollars repeat every pay period, Steps 3/4a/4b are annual figures — the most common withholding mistake in community threads is confusing the two.
Some payrolls use an aggregate method (folding the bonus into a regular check's withholding) instead of the flat rate, which produces yet another number. Either way, the filing-time tax is the same — only the timing differs.
This guide explains mechanics. It is not tax advice, and the right adjustment size for your situation is yours to decide — or to confirm with a qualified professional.
Frequently asked
**Why was my bonus taxed at 22% / so much more?**
22% is the standard flat withholding on supplemental wages; if your payroll folded it into a regular check, the marginal brackets make it look like 30%+. Neither number is the actual tax — your bonus is ordinary income, taxed at your normal rate when you file.
Are bonuses taxed higher than salary? No — same brackets, same rates. The difference is purely in withholding mechanics: salary is spread through the year at projected rates, while a bonus gets a flat 22% haircut in one check.
How do I fix over-withholding from a bonus? Raise W-4 Step 3 by the over-collected amount (annual dollars). Paychecks increase immediately, and the bonus wash corrects itself by year-end instead of waiting for a refund.
What if my bonus pushed me into a higher bracket? Only the bonus-topped dollars are taxed at the new marginal rate — brackets are slices, not cliffs. If 22% withheld less than your new marginal rate, a small per-paycheck Step 4c amount covers the difference.