Christmas Bonus Question?

Question

Hi, My company had a very very good year and my boss gave me a large Christmas bonus. The bonus was a little over 1/2 my annual salary. Usually, federal withholding takes about 16% from my monthly paycheck... but on the bonus.. this surged to 26%. Most of the others.. SS, Medicare stayed about the same. Are X-mas bonuses taxed at a higher rate?

Thank You For your help, Brian

Answer 1

The employer has a couple of ways to compute the withholding for federal income tax on a bonus. One method is to withhold at a flat rate of 25%. If this is too much you will recover the overpayment when you file.

SS and Medicare are fixed percentages.