PayGauge.online Blog

If you've ever gotten a bonus and been shocked at how much smaller it was than expected, you're not imagining things. Bonuses really do get withheld at a higher rate than your regular paycheck — but there's an important distinction between what's withheld and what you actually owe . Why bonuses are withheld differently The IRS classifies bonuses as "supplemental wages" — a category that also includes commissions, severance pay, and overtime paid separately from a regular check. Employers have two ways to withhold federal tax on supplemental wages: 1. The percentage method (most common) A flat 22% is withheld from bonuses up to $1 million in a calendar year, regardless of your actual tax bracket. Bonuses above $1 million are withheld at 37%. 2. The aggregate method Your employer combines the bonus with your regular paycheck for that pay period and withholds federal tax on the total as if it were one big paycheck at your normal rate. This can actually...

 Same job, same salary, smaller paycheck — it's one of the most common (and most confusing) payroll questions. Your take-home pay can change for a lot of reasons that have nothing to do with a pay cut. Here are the most common causes, starting with the ones people overlook. 1. Benefits enrollment or premium increases If your paycheck shrank right around open enrollment (typically fall) or the start of a new plan year (January), your health insurance premium probably went up — or you selected a different plan. Dental, vision, and life insurance premiums can also change year to year, and all of them come out before you see your paycheck. 2. A change in your W-4 If you (or your HR department) adjusted your W-4 — changed your filing status, added or removed dependents, or requested extra withholding — your federal tax withholding changes immediately. This is one of the most common silent causes of a smaller check, since it doesn't show up as a new line item, just a bigger n...