The DC bonus tax rate is not a single flat percentage. The District of Columbia taxes bonuses as ordinary income, applying the same progressive brackets that run from 4% on the first $10,000 of taxable income up to 10.75% on income above $1 million.1Office of Tax and Revenue. DC Individual and Fiduciary Income Tax Rates Your employer stacks the bonus on top of your regular wages for the pay period and withholds DC tax using the standard tables. Federal law then adds a flat 22% withholding on the bonus itself, plus Social Security and Medicare, which is why a $5,000 bonus can lose a third or more before it lands in your account.
Why There’s No Flat DC Rate on Bonuses
Some states set a separate supplemental withholding percentage for bonuses, commissions, and similar payments. DC doesn’t. When a bonus hits payroll, your employer treats it as additional wages for the current pay period and runs the combined total through DC’s regular withholding tables. The rate that effectively applies to the bonus portion depends entirely on where your overall income sits in the brackets.
That means two coworkers who receive the same bonus can see very different amounts withheld. If your salary already puts you in the 8.5% bracket, the bonus is withheld at 8.5% or higher. If you earn less, the rate is lower. The withholding is not a final tax bill; it’s an estimate the employer sends to the Office of Tax and Revenue, and the real number is settled when you file your return.
DC Income Tax Brackets That Apply to Your Bonus
These rates apply to tax years beginning after December 31, 2021, and determine both the withholding on your bonus and your final liability for the year:1Office of Tax and Revenue. DC Individual and Fiduciary Income Tax Rates
- Up to $10,000: 4% of taxable income
- $10,001 to $40,000: $400 plus 6% of the amount over $10,000
- $40,001 to $60,000: $2,200 plus 6.5% of the amount over $40,000
- $60,001 to $250,000: $3,500 plus 8.5% of the amount over $60,000
- $250,001 to $500,000: $19,650 plus 9.25% of the amount over $250,000
- $500,001 to $1,000,000: $42,775 plus 9.75% of the amount over $500,000
- Over $1,000,000: $91,525 plus 10.75% of the amount over $1,000,000
Remember that your bonus doesn’t start at the 4% rung. It sits on top of what you’ve already earned. For most DC employees with full-time salaries, that puts the bonus somewhere in the 8.5% band or above.
How Your Employer Calculates the Withholding
Because DC has no flat supplemental rate, employers use the aggregate method. Your bonus is combined with your regular wages for the current pay period, the total is looked up in DC’s withholding tables, and the tax already withheld on your regular pay is subtracted. The remainder comes out of the bonus.
This can produce temporarily steep withholding. Say you normally earn $3,000 biweekly and receive a $10,000 bonus. The payroll system treats you as if you earned $13,000 that period. Annualized, that looks like a much larger salary and pushes the calculation into a higher bracket than your actual yearly income warrants. The excess usually washes out at tax time, but the paycheck itself feels small.
Federal Tax Layered on Top
DC withholding is only part of the story. The IRS gives employers two options for federal income tax on bonuses under $1 million per calendar year:2Internal Revenue Service. Publication 15 (2026), Employer’s Tax Guide – Section: 7. Supplemental Wages
- Flat 22% method. The employer withholds exactly 22% of the bonus for federal income tax. This is available only if the employer already withholds federal income tax from your regular wages, which covers most salaried workers.
- Aggregate method. The employer combines the bonus with regular pay for the period and calculates federal tax on the total, which can push withholding higher for the same reason the DC calculation does.
If total supplemental wages from a single employer cross $1 million in a calendar year, everything above that threshold is withheld at a mandatory 37% federal rate.2Internal Revenue Service. Publication 15 (2026), Employer’s Tax Guide – Section: 7. Supplemental Wages
FICA applies as well. Social Security withholding is 6.2% on wages up to the 2026 cap of $184,500; if your salary already exceeds that cap before the bonus, no additional Social Security tax applies to the bonus itself.3Social Security Administration. Contribution and Benefit Base Medicare takes 1.45% of every dollar with no cap, and an additional 0.9% Medicare surtax applies to wages above $200,000 for the year (or $250,000 for married couples filing jointly). Your employer starts withholding the extra 0.9% once your wages pass $200,000 regardless of filing status, and any difference is settled on your federal return.4Internal Revenue Service. Topic No. 560, Additional Medicare Tax
A Worked Example: $10,000 Bonus on a $90,000 Salary
Here’s roughly what gets withheld from a $10,000 bonus if you earn $90,000 a year in DC:
- Federal income tax at the flat 22% rate: $2,200
- DC income tax at roughly 8.5%, because your salary already sits in the $60,001–$250,000 band: about $8501Office of Tax and Revenue. DC Individual and Fiduciary Income Tax Rates
- Social Security at 6.2%, since $100,000 total is below the cap: $6203Social Security Administration. Contribution and Benefit Base
- Medicare at 1.45%: $145
Total withholding comes to about $3,815, leaving roughly $6,185 of a $10,000 bonus. The exact number shifts with your W-4 elections, your employer’s chosen method, and any thresholds you’ve already crossed. Losing 35% to 40% of a bonus to combined withholding is typical for DC employees in that income range.
If a Large Bonus Is Coming
A big bonus can leave you short at tax time if your regular withholding was set for a lower income. The IRS charges an underpayment penalty when you owe more than $1,000 at filing and your total payments during the year fall below the safe harbor: 90% of your current-year liability or 100% of your prior-year liability, whichever is smaller. If your prior-year adjusted gross income exceeded $150,000, that second threshold rises to 110%.5Internal Revenue Service. Publication 15 (2026), Employer’s Tax Guide DC applies a similar structure.
The simplest protection is to ask your employer to withhold extra from the bonus check or from your remaining paychecks. You can also send estimated payments directly, using Form 1040-ES for the IRS and Form D-40ES for DC. Paying in the same quarter you receive the bonus prevents interest from accruing on the shortfall.
Settling Up at Tax Time
Everything taken out during the year is a running estimate. The real calculation happens on your DC D-40 individual income tax return, due April 15. You total all income for the year including bonuses, apply the brackets, and compare the result to what was already withheld. Overwithholding comes back as a refund; underwithholding becomes a balance due. Shortfalls are most common when a large year-end bonus represents a significant share of total compensation and the regular withholding wasn’t set high enough to absorb it.