What Is The Federal Tax Withholding Rate On Bonus Pay?


2 Answers

Iris Phillips Profile
Iris Phillips answered
Federal withholding on bonus, supplemental or other payments above an individual's usual salary can, assuming a monthly payroll, be determined by following the steps outlined below.

  1. Addition of bonus or supplemental payments to the usual yearly salary
  2. Calculation of the total withholding for the year, including the bonus
  3. Subtraction of the above total from the yearly withholding for base pay only
The resulting amount is the bonus withholding amount and is added to the usual withholding for the relevant tax period.

  • Minimum Federal Withholding Tax on Bonus Pay
The bonus tax withholding rate is mostly based on a 25% flat rate, as this is the marginal tax applicable to most employees. Federal withholding on bonus payments for employees expecting to earn in excess of $1,000,000.00 is based on a bonus withholding rate of 35%.

To find out what is the federal tax withholding rate for bonuses, etc for employees below the 25% margin, it may be necessary to take a look at the UCLA website detailing taxable incomes and withholding rates. Following this, the relevant tax department should be consulted with regards to minimum federal withholding for bonus payments on lower incomes.

In theory, the bonus tax withholding rate should be in proportion to the usual withholding rates applied. This, however, is not guaranteed, as we are not specialists in the field of federal taxation. It will therefore definitely be necessary to contact the appropriate department and inquire whether income tax withholding on bonus pay is generally at what rate the usual salary is taxed.

As a matter of fact, this may be advisable in any case, as the above information is based on federal withholding for bonus payments, and it is possible for the actual bonus withholding rates to vary slightly from one state to another.
Anonymous Profile
Anonymous answered
It depends on the method used to calculate it. If the bonus payment is included in the same payment with a regular pay period's wages or salary, employers can apply the same withholding rate used for your regular wages or salary. This may mean that if you don't currently have any withholding, no withholding may be done on your bonus payment.

If the bonus payment is paid in a separate installment, employers must withhold 25%, or 35% if the sum of your bonus payments for the year is more than 1 million.

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