Bonus & Severance Tax Withholding Sizer
Discover exactly how much of your corporate bonus, commission, or severance check will reach your bank account. Calculates statutory 22% federal supplemental withholding, state taxes, FICA wage caps, and year-end tax refunds.
1. Bonus / Severance Payment DetailsGross Wage Information
2. Filing Status & Year-End BracketTrue-Up Reconciliation
3. Pre-Tax 401(k) / Benefit DeferralsTax Shelter Options
$6,012
60.1% of grossBecause your marginal bracket (24%) exceeds the flat 22% rate, you will owe this difference upon filing Form 1040.
Understanding the IRS Supplemental Wage Withholding Rules
Why bonuses and severance payments appear heavily taxed and how statutory withholding operates.
Under IRS Publication 15-T, employers must withhold a statutory flat 22% from supplemental wages up to $1,000,000 in a calendar year. This flat rate applies regardless of whether your actual marginal tax bracket is 10%, 12%, or 35%.
If your employer bundles your bonus into your regular bi-weekly paycheck rather than issuing a separate check, payroll software may treat your annual income as if you earned that bonus every single pay period. This "aggregate method" pushes withholding into top marginal tax brackets (up to 37%).
When an employee's cumulative supplemental wages exceed $1,000,000 in a calendar year, the employer is legally required to withhold at the highest individual income tax rate (currently 37%) on all amounts exceeding $1,000,000.
Withholding is simply an estimated deposit made to the IRS on your behalf. When you file your annual Form 1040 tax return, your bonus is combined with your regular salary and taxed at your actual effective rate. Any excess withholding is refunded to you in cash.
How to use this tool
Enter the payment and its type
Put in the gross bonus, commission or severance amount and choose the payment type. The type matters: some states withhold on bonuses at a different rate from other supplemental wages.
Add your state and year-to-date wages
Year-to-date regular wages decide whether the Social Security wage base is already used up, which changes the FICA line.
Set filing status and marginal bracket
The flat 22% federal supplemental rate is what gets withheld. Your marginal bracket is what you actually owe, so the tool shows the year-end difference.
Read the net and export
The breakdown itemises federal, state, Social Security and Medicare. Export the paycheck schedule as CSV or download the summary PDF.
Frequently Asked Questions
Can I change my W-4 to reduce bonus withholding?
If your employer uses the percentage method (flat 22%), your Form W-4 elections do NOT change the statutory 22% federal rate. However, if your employer uses the aggregate method, adjusting your W-4 deductions beforehand can reduce the total tax withheld from the combined paycheck.
How can I shelter my bonus from taxes?
You can request your HR or payroll department to allocate a percentage (up to 100%) of your bonus directly into your traditional 401(k), 403(b), or Health Savings Account (HSA). This reduces your taxable income dollar-for-dollar up to annual statutory contribution limits ($23,000 for 401(k) in 2024 / $23,500 in 2025).
Is severance pay taxed the same as a bonus?
Yes. Under federal tax law, severance pay is classified as supplemental wages and is subject to the same statutory 22% flat federal withholding, state supplemental tax, Social Security (6.2%), and Medicare (1.45%) as corporate bonuses.
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