A bonus paid to a New York City resident is typically hit with about 45.6% in payroll withholding before it lands in your account: 22% federal income tax, 11.70% New York State, 4.25% New York City, and 7.65% for Social Security and Medicare. That is how bonuses are taxed in New York at the moment the check is cut, but it is not necessarily what you actually owe. Withholding is a prepayment against your annual tax bill, and most people recover part of it when they file their return.
Why Withholding Looks So High
The flat supplemental rates used on bonuses are deliberately blunt. New York’s 11.70% state rate matches the top marginal bracket, which only applies to income above $25 million. The city’s 4.25% flat rate sits above New York City’s top marginal income tax rate of 3.876%. So if you earn $90,000 and pick up a $5,000 bonus, the state and city are almost certainly withholding more than your actual marginal rate. That excess comes back as a refund when you file your New York return. The federal 22% flat rate is closer to what most bonus recipients truly owe, so refunds on the federal side tend to be smaller.
The takeaway: seeing nearly half a bonus disappear on the pay stub does not mean the government keeps nearly half. It means the employer withheld against a worst-case rate, and your actual liability is settled on your return.
Federal Withholding on Bonuses
The IRS classifies bonuses as supplemental wages, along with commissions, overtime, and similar payments outside your regular salary. When your total supplemental wages for the year are $1 million or less, the employer picks one of two methods.
The flat-rate method applies a straight 22% to the gross bonus, no matter what bracket your regular salary sits in.1Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide This is what most payroll departments use when the bonus is paid on a separate check or itemized alongside regular wages.
The aggregate method combines the bonus with your regular paycheck for that pay period and runs the total through standard federal withholding tables as if you earned that combined amount every pay period. The tax already withheld on your regular wages is subtracted, and the balance comes out of the bonus. Because the inflated pay-period figure pushes withholding up, this method usually pulls more than 22%. You get the overage back at filing, but the cash impact in the moment is heavier.
Bonuses Over $1 Million
Once your total supplemental wages for the calendar year cross $1 million, every dollar above that threshold is withheld at 37%, the top federal rate. The employer has no discretion here, and a W-4 cannot reduce it.1Internal Revenue Service. Publication 15 (2026), (Circular E), Employer’s Tax Guide The first $1 million still follows the standard 22% flat rate or the aggregate method. This 37% rate was made permanent for 2026 and beyond under P.L. 119-21.
New York State Withholding
New York State’s supplemental withholding rate is 11.70%, effective January 1, 2026.2Tax.NY.Gov. Form NYS-50-T-NYS New York State Withholding Tax Tables and Methods It applies when the bonus is paid separately from regular wages (or paid together but with each amount specified) and the employer already withholds income tax from your regular pay. Employers can also use the aggregate method at the state level, which for most earners produces less withholding than the flat 11.70% because the flat rate is tied to the state’s highest bracket.
New York City Withholding
If you live in any of the five boroughs, your employer must also withhold New York City personal income tax on the bonus at a flat 4.25%.3Tax.NY.Gov. Form NYS-50-T-NYC New York City Withholding Tax Tables and Methods This is on top of federal and state withholding. The city tax follows residency, not workplace. Your employer determines residency from the address on your Form IT-2104.4Department of Taxation and Finance. Instructions for Form IT-2104 Employee’s Withholding Allowance Certificate If you move in or out of the city during the year, file an updated IT-2104 so withholding adjusts going forward.
Yonkers Residents
Yonkers is not New York City, and it does not use the city’s rate. Yonkers imposes a surcharge calculated as a percentage of your New York State tax liability, and for supplemental wages the withholding rate is 1.95975% for Yonkers residents.5Tax.NY.Gov. NYS-50-T-Y Yonkers Withholding Tax Tables and Methods Residency is determined by the address on your Form IT-2104, the same as the city rule.
Social Security and Medicare
Bonuses are subject to the same FICA taxes as regular wages. Social Security tax is 6.2% of the gross bonus, but only until your total earnings for the year hit the wage base limit of $184,500 in 2026.6Social Security Administration. Contribution and Benefit Base Once your year-to-date compensation passes that figure, no more Social Security tax comes out of the bonus. If a bonus straddles the limit, only the portion that brings you up to $184,500 is taxed.
Medicare tax is 1.45% with no cap.7Internal Revenue Service. Topic No. 751, Social Security and Medicare Withholding Rates High earners also pay an Additional Medicare Tax of 0.9% once total wages exceed $200,000 for single filers or $250,000 for married couples filing jointly. Employers must begin withholding the extra 0.9% once they have paid you more than $200,000 in the calendar year, regardless of your filing status, and any mismatch with your actual filing-status threshold is reconciled on your return.8Internal Revenue Service. Questions and Answers for the Additional Medicare Tax
What a $10,000 Bonus Looks Like
For a New York City resident receiving a $10,000 bonus, assuming flat-rate methods everywhere and no Social Security wage-cap issue, the math works out like this:
- Federal income tax at 22%: $2,200
- New York State at 11.70%: $1,170
- New York City at 4.25%: $425
- Social Security at 6.2%: $620
- Medicare at 1.45%: $145
- Total withheld, 45.60%: $4,560
- Net deposit: $5,440
A Yonkers resident swaps the 4.25% city line for 1.95975%, cutting total withholding to about 43.31% and netting roughly $5,669 on the same bonus. A New York State resident outside both cities skips the local piece entirely, landing near 41.35% withholding and a net of about $5,865.
Your pay stub tells you which federal method your employer used. If the federal line is exactly 22% of the bonus, that is the flat-rate method. Anything else means the aggregate method was applied and your bonus was temporarily bundled with your regular pay for withholding purposes.
Ways to Reduce the Hit
Direct the Bonus Into Your 401(k)
If your employer’s plan allows it, raising your 401(k) deferral percentage before the bonus is paid pushes some or all of it into your retirement account on a pre-tax basis. That reduces the federal, state, and city income tax withheld on the bonus. The 2026 elective deferral limit is $24,500, or $32,500 with the $8,000 catch-up allowance if you are 50 or older.9Internal Revenue Service. 401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500 The cap covers all your elective deferrals across all plans for the year, so account for what you have already contributed before routing the whole bonus into the plan.10Internal Revenue Service. Retirement Topics – 401(k) and Profit-Sharing Plan Contribution Limits
A 401(k) deferral cuts income tax withholding, not FICA. Social Security and Medicare still apply to the full gross bonus.
Update Your W-4
If you expect flat-rate withholding to overshoot your real tax liability by a wide margin, you can file a revised Form W-4 with your employer. Step 4(b) lets you claim additional deductions that lower the amount subject to withholding, and Step 4(c) lets you request a specific extra dollar amount per pay period if you need to go the other way. The IRS Tax Withholding Estimator can help you land on the right numbers.11Internal Revenue Service. Tax Withholding Estimator FAQs If you only want the adjustment for the pay period containing the bonus, file another W-4 afterward to switch your withholding back.