Quick Answer
BONUS or SUP on your pay stub indicates supplemental income beyond your regular salary. These payments are taxed at a flat 22% federal rate (plus state taxes), which may be higher or lower than your regular withholding rate depending on your annual income.
Best Answer
Sarah Chen, Payroll Tax Analyst
Employees receiving bonuses, commissions, or other supplemental pay
What BONUS or SUP means on your pay stub
BONUS, SUP (supplemental), or similar codes indicate you've received supplemental income beyond your regular wages. This includes performance bonuses, holiday bonuses, commissions, overtime pay, or any other extra compensation your employer pays outside your normal salary.
The key difference from regular pay is how taxes are withheld. Your employer treats supplemental wages differently under IRS rules, which often results in higher tax withholding than your regular paycheck.
How bonus tax withholding works
According to IRS Publication 15-T, employers must use one of two methods for bonus withholding:
Flat rate method (most common):
Aggregate method:
Example: $5,000 bonus with flat rate method
Let's say you earn $70,000 annually and receive a $5,000 performance bonus:
Bonus withholding breakdown:
Your regular paycheck withholding rate might only be 12-15%, making the 22% federal rate feel like a big tax hit.
Why bonus withholding seems high
The 22% federal rate is often higher than your actual tax bracket. If you're in the 12% tax bracket (income up to $48,475 in 2026), you're having 22% withheld but will owe only 12% when you file your tax return. This creates a refund.
Tax withholding comparison by income level
What happens at tax time
Bonus income is added to your regular W-2 wages and taxed at your marginal rate — not the 22% withholding rate. If too much was withheld, you get a refund. If too little was withheld, you owe additional tax.
Key factors affecting bonus taxation
What you should do
Review your year-to-date withholding after receiving a bonus. If you're consistently over-withheld on bonuses, consider adjusting your W-4 to reduce regular paycheck withholding, since you'll get the excess back as a refund anyway.
Use our paystub explainer tool to understand exactly how your bonus affects your total tax picture and whether you need to make estimated payments or adjust withholding.
Key takeaway: Bonuses are withheld at a flat 22% federal rate, which often over-withholds for middle-income earners but creates refunds at tax time.
Key Takeaway: Bonuses are withheld at a flat 22% federal rate, which often over-withholds for middle-income earners but creates refunds at tax time.
Bonus tax withholding vs. actual tax owed by income level
| Annual Income | Tax Bracket | Bonus Withholding | Likely Actual Rate | Refund/Owe |
|---|---|---|---|---|
| $50,000 | 12% | 22% | 12% | 10% refund |
| $75,000 | 22% | 22% | 22% | Break even |
| $125,000 | 24% | 22% | 24% | 2% additional owed |
| $300,000 | 32% | 22% | 32% | 10% additional owed |
More Perspectives
Sarah Chen, Payroll Tax Analyst
High-income employees who may be under-withheld on bonus payments
Bonus taxation for high earners
As a high earner, the 22% flat withholding rate on bonuses may actually under-withhold compared to your marginal tax rate. This can create an unexpected tax bill if you don't plan accordingly.
Example: $200K salary with $20K bonus
With $200,000 base salary, you're likely in the 24% or 32% federal tax bracket. A $20,000 bonus withheld at 22% means:
Add state taxes (often 5-13% for high earners), and the gap widens further.
Additional considerations at your income level
Additional Medicare Tax: If your total income exceeds $200,000, you owe an extra 0.9% Medicare tax on the excess. Bonus withholding may not account for this.
Net Investment Income Tax: High earners often have investment income subject to the 3.8% NIIT, making cash flow planning more complex.
Estimated tax payments: Large bonuses late in the year may require quarterly estimated payments to avoid underpayment penalties.
Strategic planning tips
Key takeaway: High earners often owe more than the 22% withheld on bonuses, requiring additional tax planning to avoid underpayment penalties.
Key Takeaway: High earners often owe more than the 22% withheld on bonuses, requiring additional tax planning to avoid underpayment penalties.
Sources
- IRS Publication 15-T — Federal Income Tax Withholding Methods - Supplemental Wages
Reviewed by Sarah Chen, Payroll Tax Analyst on February 28, 2026
This content is for educational purposes only and is not a substitute for professional tax advice. Consult a qualified tax professional for advice specific to your situation.