How Are Bonuses Taxed? A Quick Explanation - IRS. com The employees total taxable income of $41,000 falls into their usual 12% tax bracket The IRS determines this employee’s total owed taxes based on the 12% rate (instead of the 22% rate used for the bonus), then gets a refund on the bonus since they paid more than they actually owed
Bonus tax rate: How are bonuses taxed? | Fidelity There are ways to reduce the tax impact of your bonus Your boss just delivered the great news: You earned a bonus this year Before you start making plans to spend it, it’s important to understand how that income will get taxed
Bonus tax rate: How bonuses are taxed | Prudential Financial Bonuses are taxed differently than regular income and are considered supplemental wages The IRS has two methods for calculating the tax on bonuses: The percentage method and the aggregate method Bonuses over $1 million are taxed at a higher rate