Supplemental Wage Tax Calculator
Bonuses, commissions, overtime, and severance are all "supplemental wages" under IRS rules. Calculate the tax withholding on any supplemental payment.
✓ Covers bonuses, commissions, severance
✓ Flat 22% federal rate applied
✓ Includes FICA & state taxes
Bonus pay tax calculator · Percentage method
Gross bonus
$5,000.00
Federal withholding (22%)
−$1,100.00
State withholding (6.60%)
−$330.00
Social Security (6.2%)
−$310.00
Medicare (1.45%)
−$72.50
Total withholding
−$1,812.50
36.25% effective
Net bonus (take-home)
$3,187.50
What Counts as Supplemental Wages?
The IRS defines supplemental wages as compensation paid in addition to regular wages. Common types include:
- Bonuses — annual, quarterly, signing, referral, performance
- Commissions — sales commissions, finder's fees
- Overtime pay — any hours over 40/week (FLSA)
- Severance pay — payments upon termination
- Back pay — retroactive pay increases, settlements
- Taxable fringe benefits — personal use of company car, etc.
How Supplemental Wages Are Taxed
When supplemental wages are identified separately from regular wages, employers can use the percentage method: withhold a flat 22% for federal income tax. This simplifies payroll and often benefits employees in higher brackets.
$1 Million Threshold
If your total supplemental wages for the year exceed $1 million, any amount over that threshold must be withheld at 37% (the top marginal rate). The first $1 million still uses the 22% rate.