10/13/2026
FAQ of the Month: "How are year-end bonuses taxed?"
Bonuses are considered supplemental wages, which means they're taxable just like regular pay. For federal income tax, bonuses are often withheld at a flat rate (currently 22% for most bonuses), plus Social Security, Medicare, and any applicable state taxes.
That's why employees are sometimes surprised when their bonus check is smaller than expected.
A little planning goes a long way:
✔️ Decide on bonus amounts and timing early
✔️ Choose whether to pay bonuses separately or with regular payroll
✔️ Let employees know what to expect
Planning year-end bonuses? Our team is happy to help you get it right. Book a payroll checkup today to start the conversation!