What is the difference between the 22% and 37% supplemental rate?

The IRS requires a flat 22% federal withholding rate on supplemental wages. If your cumulative supplemental wages for the calendar year exceed $1,000,000, the amount above $1,000,000 must be withheld at a mandatory flat 37% rate, regardless of what is on your W-4.

Does the $1,000,000 threshold include my regular salary?

No. The threshold applies only to supplemental wages (bonuses, commissions, severance, and similar payments) paid during the calendar year, not your regular hourly or salary wages.

What counts as a supplemental wage?

Bonuses, commissions, overtime pay in some cases, severance pay, back pay, accumulated sick leave payouts, and awards are common examples. Regular hourly or salary wages for time worked are not supplemental wages.

How does the aggregate method differ from the flat rate method?

The aggregate method combines the supplemental payment with your regular wages and withholds tax as if it were one payment at your normal marginal rate, instead of a flat percentage. Depending on your income level, this can result in more or less withholding than the flat rate. The estimate here uses your total annual income to approximate the aggregate method; your employer’s actual calculation may use a different pay-period basis.

Is this withholding my final tax bill?

No. Withholding is a prepayment toward your total annual tax liability. Your actual tax on the payment depends on your full-year income and is settled when you file your tax return.

Does this include state taxes or FICA?

No. This tool covers federal income tax withholding only. Social Security and Medicare (FICA) still apply to supplemental wages, and many states have their own supplemental withholding rules.

Supplemental Bonus Tax Calculator

Name: Supplemental Bonus Tax Calculator
Availability: InStock
Author: Nham Vu

Estimate federal withholding on a bonus, commission, or severance payment using the IRS flat 22%/37% supplemental wage rate, with an optional aggregate-method comparison.

Supplemental Payment Details

Gross Payment Amount ($)

YTD Supplemental Wages Already Paid ($) Optional — used for the $1,000,000 threshold

Compare with aggregate method (estimate)

Enter a payment amount and click Calculate to see the withholding breakdown.

Summary

Estimate federal withholding on a bonus, commission, or severance payment using the IRS flat 22%/37% supplemental wage rate, with an optional aggregate-method comparison.

How it works

Enter the gross amount of the supplemental payment (bonus, commission, or severance).
Enter supplemental wages already paid to you this year, if any — this determines how much of the new payment falls above the $1,000,000 cumulative threshold.
The calculator splits the payment into the portion withheld at 22% and, if applicable, the portion above $1M withheld at 37%.
Optionally enable the aggregate method comparison and enter your annual regular wages and filing status.
The aggregate estimate adds the payment to your annual income and calculates the marginal federal tax on it, for comparison against the flat rate.

Use cases

Estimating take-home pay on a year-end or performance bonus.
Planning around a large commission payout.
Understanding withholding on a severance payment.
Checking whether a bonus will cross the $1,000,000 cumulative supplemental wage threshold.
Comparing flat-rate withholding against an aggregate-method estimate.
Payroll or HR quick reference for supplemental wage withholding rules.

Frequently Asked Questions

Last updated: 2026-07-24 · Reviewed by Nham Vu