How the Flat 22% Method Works
Your employer withholds exactly 22% of your bonus for federal income tax — no matter if you earn $40,000 or $200,000 in salary. FICA taxes (Social Security and Medicare) still apply normally on top of this federal withholding.
Gross bonus: $10,000. Federal withholding (22%): $2,200. Social Security (6.2%): $620. Medicare (1.45%): $145. California state (10.23%): $1,023. Net take-home: approximately $6,012.
How the Aggregate Method Works
Your employer adds the bonus to your most recent regular paycheck, then annualizes the combined amount to determine withholding. A bi-weekly paycheck of $3,000 combined with a $10,000 bonus becomes $13,000 — taxed as if you earn $338,000 annually for that period.
Flat vs aggregate method — approximate federal + FICA only, no state tax
| Scenario | Annual Salary | Bonus | Flat Method Net | Aggregate Net | Difference |
|---|---|---|---|---|---|
| Low earner | $40,000 | $5,000 | $3,642 | $3,720 | +$78 aggregate |
| Mid earner | $80,000 | $10,000 | $7,035 | $6,810 | +$225 flat |
| High earner | $150,000 | $20,000 | $14,070 | $12,940 | +$1,130 flat |
| Very high earner | $250,000 | $50,000 | $35,175 | $31,200 | +$3,975 flat |
Which Method Is Better for You?
For employees earning over $50,000, the flat 22% method usually results in less withheld — your actual marginal rate often exceeds 22%, so the aggregate method overwitholds. For lower earners (under $44,725 for single filers in 2025), the 22% flat may actually overwithhold compared to the true 12% marginal rate.
- Earning under $44,725 (single): flat 22% overwitholds — aggregate might produce smaller deduction
- Earning $44,725-$100,525 (22% bracket): both methods produce similar results
- Earning over $100,525 (24%+ bracket): flat 22% means less withheld upfront
- Neither method changes your final annual tax bill — only when you pay it
- Request bonus as a separate check to enable the flat method if aggregate hurts you
Can You Choose Your Withholding Method?
Generally no — employers choose which method their payroll system uses. The IRS only allows the flat 22% rate when the bonus is paid separately from a regular paycheck. If bonus and salary appear on the same check, the employer must use the aggregate method. Ask HR to issue your bonus as a separate payment if you prefer the 22% flat approach.
Compare Both Methods for Your Bonus
Run the flat 22% and aggregate calculations for your salary and bonus to see the exact withholding difference.