Question: Why is bonus taxed so high?

Why bonuses are taxed so high It comes down to whats called supplemental income. Although all of your earned dollars are equal at tax time, when bonuses are issued, theyre considered supplemental income by the IRS and held to a higher withholding rate.

Are bonuses taxed at 50%?

While bonuses are subject to income taxes, they dont simply get added to your income and taxed at your top marginal tax rate. Instead, your bonus counts as supplemental income and is subject to federal withholding at a 22% flat rate.

Why are bonuses taxed at 50 percent?

It comes down to whats called supplemental income. Although all of your earned dollars are equal at tax time, when bonuses are issued, theyre considered supplemental income by the IRS and held to a higher withholding rate. Its probably that withholding youre noticing on a shrunken bonus check.

How much will I get taxed on my bonus?

A bonus is always a welcome bump in pay, but its taxed differently from regular income. Instead of adding it to your ordinary income and taxing it at your top marginal tax rate, the IRS considers bonuses to be “supplemental wages” and levies a flat 22 percent federal withholding rate.

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