Use supplemental tax rates

Based on your employees' year-to-date wages, we determine which supplemental tax rate (25% or 39.6%) applies to their bonus or commission and automatically apply it for you.

You can use the supplemental federal income tax rate when you create a bonus or commission check if these conditions are met:

• You pay the bonus separately from a regular paycheck. How do I pay bonuses separately from paychecks?
• You pay the commission separately from a regular paycheck. How do I pay commission separately from paychecks?
• You withhold at regular withholding rates on the employee's regular salary.

The federal supplemental income tax rate is currently a flat 25% on wages up to $1,000,000. This rate may not be beneficial to your employees if it's higher than their regular rate. If you want to use the supplemental income tax rate for some employee bonuses or commission pay and not for others, do separate bonus only or commission only runs.

If your state also has a supplemental income tax rate, we use the state rate when you choose to use the supplemental rates.

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