How Bonuses Are Taxed in California (10.23% + 22%)
A bonus check can look smaller than you expected. Here's where each dollar goes, and why most of the gap is withholding rather than extra tax.
A bonus paid separately from your regular pay is usually withheld at flat rates: 10.23% for California income tax and 22% for federal income tax, plus 6.2% Social Security, 1.45% Medicare and 1.3% California SDI. On a $10,000 bonus that's about $4,118 withheld. Bonuses aren't taxed at a higher rate than salary. The withholding is just a flat estimate, and your real tax is settled when you file.
Withholding vs actual tax
Two different things happen to a bonus. When it's paid, your employer withholds money and sends it to the IRS and the state. That's a prepayment. Your tax is decided later, when you file, based on your total income for the year. The bonus is just more income. It lands in whatever brackets your total income reaches, the same as an extra month of salary would.
Flat-rate withholding exists because payroll systems can't know your full-year picture. So the rules give employers simple percentages for irregular pay. If those percentages are higher than your actual rate, you get money back. If they're lower, as they often are for high earners, you owe at filing.
California's supplemental rates
California's Employment Development Department sets two flat rates in its employer guide (DE 44):
- 10.23% for bonuses and stock options.
- 6.6% for other supplemental wages paid separately from regular pay, such as overtime pay, commissions, sales awards, severance, and vacation pay.
These rates ignore the allowances you claimed on your DE 4. If the bonus comes in the same check as your regular pay, EDD requires your employer to withhold on the combined amount as if it were a larger regular paycheck. Employers can also choose that method for a bonus paid on its own. So the same bonus can be withheld differently at two companies.
Federal flat rate and the $1M rule
For federal income tax, IRS Publication 15 lets employers withhold a flat 22% on supplemental wages. There's one mandatory rule on top of that. Once an employee's supplemental wages from the employer pass $1,000,000 in a calendar year, every dollar over that line must be withheld at 37%, the top federal rate, whatever the W-4 says. A bonus that straddles the line is split: 22% on the part below and 37% on the part above.
Social Security, Medicare and SDI on bonuses
Payroll taxes treat a bonus exactly like regular wages:
- Social Security, 6.2%, until your wages for the year reach $184,500. If a bonus pushes you past that, only the part below the line is taxed. A December bonus for a high earner can have little or none.
- Medicare, 1.45%, on everything, with no cap.
- Additional Medicare, 0.9%. Your employer must start withholding it once your wages from that employer pass $200,000 in the year, whatever your filing status.
- California SDI, 1.3%, on all wages. California removed the SDI wage cap in 2024, so a large bonus pays SDI on every dollar.
The Additional Medicare rule is a good example of withholding and tax not matching. Your employer starts withholding at $200,000 of wages no matter how you file, but the tax itself starts at $200,000 for single filers and $250,000 for married couples filing jointly, counting both spouses' wages. A married couple where one spouse earns $220,000 and the other earns nothing will have Additional Medicare withheld but owe none. The difference is settled on Form 8959 with their federal return. The reverse also happens: two spouses who each earn under $200,000 can owe it together without any being withheld.
Worked example
Say you're paid a $10,000 bonus in its own check, you've earned $80,000 so far this year, and it's your first bonus of the year. With the flat-rate method, the withholding looks like this:
| Withholding | Amount |
|---|---|
| Federal income tax | $2,200.00 |
| California income tax | $1,023.00 |
| Social Security | $620.00 |
| Medicare | $145.00 |
| Additional Medicare | $0.00 |
| California SDI | $130.00 |
| Total withheld | $4,118.00 |
| Take-home | $5,882.00 |
That's 41.2% withheld. For a single filer at that income, the bonus would really be taxed at a 22% federal rate (tax year 2026 brackets) and a 9.3% California rate (tax year 2025 brackets), so the flat rates are a fair estimate. At lower incomes they overshoot and you'd likely see some back. At high incomes they undershoot.
Getting over-withholding back
There's no separate form for bonus tax. The federal and California income tax withheld from your bonus appears on your W-2 with everything else, and it counts toward your total tax when you file your Form 1040 and Form 540. If the year's withholding was more than you owe, you get a refund. If it was less, you pay the difference.
If you had two or more employers and your combined wages passed $184,500, too much Social Security may have been withheld. You claim the excess as a credit on your federal return. SDI has no wage cap, so there's no excess-SDI refund. If a bonus is going to leave you under-withheld, you can raise your regular withholding with a new W-4 or DE 4 for the rest of the year.
Run your numbers
Our California Bonus Tax Calculator uses your bonus and your year-to-date wages, applies each cap to the right slice of the bonus, and shows the withholding line by line. To see whether the year as a whole leaves you with a refund, try the California Tax Refund Calculator. For how regular California withholding works, see our DE 4 withholding guide.
Frequently Asked Questions
Is a bonus taxed at a higher rate than salary in California?
No. A bonus is added to your other income, and your final tax is figured on the total when you file. What's different is the withholding: a separately paid bonus is often withheld at flat rates (10.23% California and 22% federal) instead of your paycheck tables.
What is California's supplemental withholding rate?
EDD sets 10.23% for bonuses and stock options and 6.6% for other supplemental wages paid separately from regular pay. Both ignore the allowances on your DE 4.
What happens to federal withholding on bonuses over $1 million?
Once your supplemental wages from an employer pass $1,000,000 in a calendar year, the IRS requires the excess to be withheld at 37%, regardless of your W-4. The part up to $1,000,000 can still be withheld at 22%.
Do Social Security and SDI come out of a bonus?
Yes. Social Security takes 6.2% until your wages for the year reach $184,500. Medicare takes 1.45% with no cap, plus 0.9% on wages over $200,000. California SDI takes 1.3% of all wages, with no cap.
Will I get bonus withholding back?
Only if the total withheld during the year is more than your actual tax. The flat 22% and 10.23% rates can be too high or too low depending on your income, so the difference shows up as a refund or a balance due when you file.
This article is for general information only and is not tax advice. Your employer's payroll method and your pre-tax deductions change the actual amounts withheld. Consult a tax professional about your situation.