Bonus Tax Gap: Will You Owe or Get a Refund?
Example: Bonus amount (gross): 25000 $ · Regular W-2 income this year (pre-bonus): 120000 $ · Federal tax already withheld from regular paychecks: 22000 $ · Bonus withholding rate your employer used: 22 % · Filing status (0 = Single, 1 = Married Filing Jointly): 0
| Expected refund (positive) or amount owed (negative) | $3,966 |
| True federal tax on total income | $23,534 |
| Total federal tax withheld | $27,500 |
| Withheld from bonus specifically | $5,500 |
Worked example
A $25,000 bonus on top of $120,000 salary (single filer) = $145,000 total income. After the 2026 standard deduction of $16,100, taxable income is $128,900. True federal tax: roughly $23,534. Salary withholding of $22,000 plus bonus withholding of $5,500 (22%) = $27,500 total withheld. Refund: about $3,966 — at this income the flat 22% is close enough that the bonus is not the problem. Now swap in a $200,000 salary. Taxable income becomes $208,900, which clears the top of the 24% band at $201,775, so part of the bonus is taxed at 32%. The bonus slice now costs $6,570 in federal tax against $5,500 withheld — a $1,070 shortfall created by the bonus alone, before anything else in the return is counted.
Frequently asked questions
What is the supplemental withholding rate and why does it differ from my actual rate?
The IRS supplemental wage rate is 22% on amounts up to $1 million (37% above that). It is a simplified flat-rate deposit designed for easy payroll processing — it does not reflect your actual marginal rate, which is based on all your income for the year. The difference settles at filing.
Can I ask my employer to withhold more from my bonus?
Yes — you can submit an updated W-4 requesting additional withholding, or ask your employer if they can withhold at your actual marginal rate. Some payroll systems allow this; others apply the flat 22% automatically. Withholding extra from regular paychecks in advance is an alternative.
What happens if I significantly underpay during the year?
If you owe more than $1,000 in additional taxes and have not withheld or paid at least 90% of your current-year tax (or 100% of last year's), the IRS may impose an underpayment penalty. Paying estimated quarterly taxes after receiving a large bonus prevents this.
Does this calculator include state income tax withholding?
No — the calculation covers federal income tax only. State bonus withholding rules vary; some states use a flat rate, others use the same supplemental method as the IRS. Add your state rate to the gap calculation for a complete picture.