Similar to salaries, employee bonuses are subject to taxes—specifically, a bonus tax rate, which is typically a flat rate of 22%. This can change depending on the amount of the bonus and the method used to calculate the applicable bonus taxes. Generally, all types of bonuses need to be taxed, but reducing the tax income is one way to help minimize the tax burden. Read on to learn how this can be done, including the different ways to compute the tax amount on bonuses.
Bonus Tax Definition
Bonus taxes are taxes imposed on additional compensation that employees receive on top of their regular salaries. These payouts are also considered by the Internal Revenue Service (IRS) as taxable supplemental wages. Here are a few examples:
