June 17, 2025
Bonus Tax Breakdown: What You Need to Know
Bonuses, including commissions, overtime, and prizes, are considered “supplemental income” and are taxed differently than regular wages. Employers can use either the percentage method (withholding 22% for bonuses under $1 million) or the aggregate method (calculating taxes as if the bonus were part of a regular paycheck). Bonuses over $1 million are taxed at 22% on the first $1 million and then at the individual’s regular income tax bracket (up to 3
