Why Is There So Little Left for Me? Withholding on Supplemental Wages, like Bonuses

Where wages are paid outside ordinary salary, most employers choose to withhold at an optional flat percentage, instead of using the withholding tables. The current flat rate is 22%. Then again, special rules apply to the extent supplemental wages are paid to any one employee during the calendar year which (in the aggregate) exceed $1 million. Where a supplemental wage payment, when added to other supplemental wage payments made to the employee during the calendar year exceed $1 million, the excess is subject to withholding at 37% (or the highest rate of income tax for the year).

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