Aggregate vs. percentage method for bonuses
Employers have two ways to withhold federal income tax from a bonus. The percentage method (also called the flat-rate or optional flat method) withholds exactly 22%. The aggregate method adds the bonus to a regular paycheck, withholds on the total as if it were one normal paycheck, and subtracts what was already withheld from the regular pay. The two can differ by hundreds of dollars on the same bonus.
The IRS's own example
Publication 15 (2026) follows an employee, Sharon, paid $2,000 a month, single, with no other W-4 entries. Her May 1 paycheck has $65 withheld. On May 15 she receives a $1,000 bonus:
- Aggregate: add the bonus to the May 1 wages ($3,000), find the withholding on $3,000 ($179), subtract the $65 already withheld — $114 comes out of the bonus.
- Flat rate: 22% of $1,000 — $220.
A second $2,000 bonus on May 29 under the aggregate method is computed on all three amounts together ($5,000 → $419), minus the $65 and $114 already withheld: $240. Under the flat rate it would be $440.
Which method takes more?
The aggregate method annualizes the paycheck plus bonus. If that pushes the combined amount into a bracket above 22%, aggregate withholds more; if your paycheck bracket is 10% or 12%, it withholds less. For a $5,000 bonus on a biweekly payroll (2026 Publication 15-T annual percentage tables, standard withholding):
| Annual salary | Flat 22% | Aggregate, single | Aggregate, married jointly |
|---|---|---|---|
| $30,000 | $1,100.00 | $989.00 | $674.62 |
| $60,000 | $1,100.00 | $1,127.46 | $819.23 |
| $90,000 | $1,100.00 | $1,182.08 | $934.62 |
| $150,000 | $1,100.00 | $1,400.01 | $1,128.00 |
| $250,000 | $1,100.00 | $1,724.24 | $1,200.00 |
The pattern is the point: on a biweekly payroll, a $5,000 bonus added to one paycheck looks to the tables like a $130,000 raise for that period, so even a modest salary can be pushed into the 24% or 32% withholding bracket for that one check. A monthly payroll spreads the same bonus over fewer annualized dollars and lands lower.
Why your W-4 matters only for aggregate
The flat rate ignores your Form W-4 entirely. The aggregate method uses it: filing status, the Step 2 two-jobs checkbox (which roughly halves the bracket thresholds) and any Step 4(c) extra withholding all change the result. The calculator applies Worksheet 1A of Publication 15-T for the aggregate method, including the $12,900 / $8,600 Step 1(g) adjustment for 2026.
Some states follow the federal choice
A handful of states tie their bonus rule to the federal method. Kansas uses 5% when federal tax is flat-rated and its own formula otherwise: a $5,000 bonus on a $78,000 salary gets $250.00 of Kansas tax with the federal flat rate and $279.00 with aggregate. New Mexico uses 5.9% versus its tables — $295.00 or $245.00. Iowa requires 3.8% whenever federal is flat-rated, and Vermont's estimate is 30% of whatever federal withholding is. Connecticut and Hawaii go the other way: they only allow aggregation, no matter which federal method the employer picks.
Neither method changes your tax
Both methods are prepayments. Your actual tax on the bonus is settled on your return, and the method only shifts money between your paycheck and your refund. If you'd rather not wait for a refund, ask whether your employer will use the flat rate (if aggregate is over-withholding) or adjust your W-4 for the rest of the year.