Blended Tax Rate on a Bonus or RSUs: Why Withholding Isn't Your Rate

You got a $20,000 bonus and roughly $4,400 vanished before it hit your account. That 22% is not your tax rate — it is a flat withholding rule for supplemental wages, and it often has little to do with what you actually owe. The number that matters is how the bonus fits into your blended tax rate for the whole year.

A bonus or RSU vest is ordinary income. It does not have its own tax rate — it stacks on top of your salary and is taxed at your marginal rate, then settles into your annual blended (effective) rate when you file. Withholding is just a prepayment; the true math happens on your return.

See where your total income lands across the brackets:

Withholding vs Actual Tax

The IRS treats bonuses, commissions, and RSUs as supplemental wages, which employers withhold using flat rates:

That flat 22% is a withholding percentage, not a tax bracket. When you file:

• If your marginal rate is below 22%, you over-withheld and get some back.
• If your marginal rate is above 22% (24%, 32%, 35%...), 22% was too little and you may owe more.

Either way, the bonus is ultimately absorbed into your annual blended rate.

Worked Example

Salary $130,000, single, plus a $20,000 bonus, 2025:

• Total ordinary income: $150,000. The bonus lands entirely in the 24% marginal bracket.
• Real federal tax on the bonus: $20,000 × 24% = $4,800.
• Withheld from the bonus at the flat rate: $20,000 × 22% = $4,400.
• You will owe roughly $400 more on that bonus at filing, because your marginal rate (24%) exceeds the 22% withholding.

Meanwhile your blended rate on the full $150,000 is about 18.5% — the single number describing your whole year, bonus included.

RSUs Have Two Taxable Moments

1. At vest: the fair market value is ordinary income, taxed like a bonus and folded into your blended rate for that year.
2. At sale: any gain or loss after vesting is a capital gain — short-term (ordinary rates) if held under a year, long-term (0/15/20%) if held longer. That capital gains piece is separate from your ordinary blended rate.

The Bottom Line

Do not judge a bonus by its withholding. Judge it by your marginal rate (to know the true cost of that money) and your blended rate (to see your overall year). If the two feel confusing, the difference between marginal and effective/blended rates is the concept to master. The IRS explains supplemental wage withholding in its employer guidance.

Frequently Asked Questions

Are bonuses taxed at a higher rate than regular income?

No. Bonuses are ordinary income taxed at your normal marginal rate. The 22% (or 37% above $1 million) you see is a flat withholding rate for supplemental wages, not a special tax bracket. The actual tax is settled on your return based on your total income.

Why was my bonus withheld at 22%?

Because the IRS classifies bonuses as supplemental wages, which employers commonly withhold at a flat 22% federal rate up to $1 million. This is a prepayment estimate — your true tax depends on your marginal bracket, so you may get a refund or owe more when you file.

How do RSUs affect my blended tax rate?

RSUs are taxed as ordinary income at their value when they vest, stacking on top of your salary and raising your blended (effective) rate for that year. Any gain after vesting is taxed separately as a capital gain when you sell the shares.

Will I owe more tax on my bonus in April?

You may. If your marginal tax rate is higher than the 22% flat withholding — which is common for earners in the 24% bracket and above — the withholding was insufficient and you will owe the difference. Set aside the gap between your marginal rate and 22% to avoid a surprise.