Supplemental Wage Tax Calculator

By Mustafa Bilgic · Last updated 25 June 2026

Bonuses, commissions, severance, back pay, and cashed-out PTO are all supplemental wages — and the IRS lets employers withhold federal tax on them at a flat 22% (37% above $1 million per year). This supplemental wage tax calculator applies that flat rate plus FICA and your state supplemental rate so you can see the withholding and net amount on any supplemental payment for 2026.

Estimates for educational purposes only; not tax advice. Flat-rate withholding is not your final tax — supplemental wages are ordinary income taxed at your marginal rate at filing. Consult IRS Publication 15 (Section 7) or a tax professional.

Supplemental Wage Tax Calculator (2026)

Enter an amount and press Calculate.

Answer First: $10,000 Supplemental Pay Nets About $7,035

A $10,000 supplemental payment with no state tax has 22% federal ($2,200) plus 7.65% FICA ($765) withheld — total $2,965 — leaving $7,035. The same payment in a state with a 5% supplemental rate loses an extra $500, netting $6,535. The calculator handles bonuses, commissions, severance, and other supplemental types the same way because the IRS withholding rule is identical for all of them.

What Counts as a Supplemental Wage?

The IRS defines supplemental wages broadly. They include:

What they have in common is that they are paid in addition to your regular wages, which is why the IRS allows the streamlined flat-rate withholding.

The Two Withholding Methods

Employers can withhold federal income tax on supplemental wages two ways:

  1. Flat percentage method (22%): Only allowed when the supplemental wages are stated separately from regular wages and income tax was withheld from your regular wages this year or last. Simple and predictable — this is what the calculator models.
  2. Aggregate method: The supplemental amount is added to your most recent regular paycheck and withheld using your W-4 on the combined total. This often withholds more upfront.

One key rule: any supplemental wages exceeding $1,000,000 in a calendar year must use 37% on the excess — the employer has no choice on that portion.

Net of Common Supplemental Amounts (22% + FICA, no state)

Gross supplementalFederal 22%FICA 7.65%Net
$2,000$440.00$153.00$1,407.00
$5,000$1,100.00$382.50$3,517.50
$10,000$2,200.00$765.00$7,035.00
$25,000$5,500.00$1,912.50$17,587.50

It's Withholding, Not Final Tax

The flat 22% is a withholding rate, not the tax you ultimately owe. Supplemental wages are ordinary income; at filing they are taxed at your real marginal bracket. If your effective rate is below 22%, you recover the difference as a refund; if you are a high earner above 22%, you may owe more. This is why a year with large commissions or a big severance can change your refund or balance due significantly — plan for the reconciliation, not just the withholding.

Don't Forget the Social Security Cap

FICA on supplemental wages follows the same $184,500 Social Security wage base as regular pay. If your year-to-date wages already exceed that base, the 6.2% Social Security portion no longer applies to the supplemental payment, so only 1.45% Medicare (plus 0.9% additional Medicare if over $200,000) remains. For most mid-year payments below the cap, the full 7.65% applies, which is the calculator's default.

Key Takeaways: Supplemental Wage Tax

Frequently Asked Questions

What are supplemental wages?

Payments outside regular salary: bonuses, commissions, overtime, severance, sick-leave payouts, back pay, awards, and taxable fringe benefits.

What is the supplemental withholding rate for 2026?

A flat 22% federal up to $1 million per year, 37% above that, plus FICA and any state supplemental rate.

Are commissions taxed differently than salary?

Commissions are supplemental wages, so withholding may differ, but the final tax is the same ordinary-income marginal rate at filing.

Is severance pay taxed as supplemental wages?

Yes — 22% flat federal (or aggregate method) plus FICA and state tax. It is fully taxable ordinary income.