2026 Bonus Tax by State

When employers pay bonuses separately from regular wages, IRS Publication 15 (Circular E) allows the flat supplemental wage method: 22% federal income tax withholding on amounts up to $1 million of supplemental wages per employee per year (mandatory 37% on the excess).

This hub ranks all 50 states and DC by modeled state supplemental withholding on a fixed $10,000 bonus with $80,000 year-to-date wages (flat supplemental method). Federal and FICA are identical across states on that vignette, so the ranking isolates state payroll rules.

Rank #1 means the highest modeled state supplemental withholding — not “worst place to work.” Housing, sales tax, and regular wage brackets still dominate relocation math.

Publication 15 defines supplemental wages as payments that aren’t regular wages — including bonuses, commissions, overtime paid separately, severance, awards, back pay, reported tips, and taxable fringe benefits paid under a nonaccountable plan.

Employers may treat overtime and tips as regular wages instead. How you withhold depends on whether the payment is identified separately from regular wages and whether income tax was withheld from regular wages in the current or prior year.

Social Security (6.2% up to the $184,500 wage base for 2026), Medicare (1.45%), and Additional Medicare (0.9% over $200,000) still apply regardless of the income-tax method.

New York’s published 11.7% supplemental rate (NYS-50-T-NYS, revised Jan 2026) withholds about $1,170 on a $10,000 bonus — before federal and FICA. NYC residents can owe additional city tax not shown here.

California’s Employer’s Guide (DE 44) sets 10.23% on bonuses and stock options and 6.6% on other supplemental wages (overtime, commissions, vacation pay). On this vignette the bonus rate yields about $1,023 state tax.

Against Texas or Florida ($0 state), the state-only gap vs New York reaches about $1,170 on the same $10,000 bonus.

Flat supplemental withholding is a paycheck rule, not your final Form 1040 liability. If your marginal federal bracket is 24%, 32%, or 35%, 22% withholding can under-collect — you may owe more at filing (or get a refund if over-withheld).

On a $1.5 million supplemental payment in a no-tax state, our engine withholds $405,000 federal income tax (22% on the first $1M + 37% on the excess) — an effective federal rate of about 27%.

Employers may instead use the aggregate method (combine bonus with regular wages for that period). Our vignette uses the flat percentage method for apples-to-apples state comparison.

Vermont’s employer instructions set supplemental withholding at 30% of the federal income tax withheld on the payment (6% for certain nonqualified deferred compensation). On this vignette that is $660 state tax (30% of $2,200 federal).

Wisconsin publishes graduated supplemental rates by annual gross wages. With $80,000 YTD + $10,000 bonus, our engine uses the 5.3% band.

Always read the state’s current withholding booklet — special formulas change more often than headline PIT brackets.

Employees compare take-home on signing bonuses, year-end bonuses, and retention awards when offers span high-tax and no-tax states.

Payroll and HR teams look up supplemental rates when configuring multi-state withholding or explaining why a bonus stub looks “over-taxed.”

Journalists covering NY/CA rate stories need a fixed vignette to quantify dollar gaps — that is what this hub publishes from the same engine as /bonus-tax-calculator.