How Much Are Bonuses Taxed in Nebraska? 22% Federal, 3.5% State

In Nebraska, a bonus paid separately from your regular wages is typically hit with 22% federal withholding, 3.5% state withholding, 6.2% Social Security, and 1.45% Medicare — so how much bonuses are taxed in Nebraska comes out to roughly 33% off the top for most workers, before any additional Medicare surtax or high-earner adjustments.¹² Those are withholding rates, not final tax rates. Your actual tax on the bonus is settled when you file your annual return, and you may get some of the withholding back as a refund.

Federal Withholding on Your Bonus

The IRS treats bonuses as supplemental wages, along with commissions, overtime, severance, and prizes.¹ Employers can use one of two methods.

Flat 22% Method

When the bonus is identified separately from your regular paycheck, your employer can withhold a flat 22% for federal income tax. No other flat percentage is allowed.¹ This is the method most payroll systems default to because it keeps the bonus calculation clean.

Aggregate Method

Alternatively, your employer combines the bonus with your regular pay for that pay period and runs the whole amount through the standard wage-bracket or percentage tables.³ Because that combined figure can land in a higher bracket for the period, the withholding is often larger than the flat 22% would produce. Anything overwithheld comes back to you at tax time.

Bonuses Over $1 Million

If your supplemental wages from one employer exceed $1 million in a calendar year, federal law mandates 37% withholding on the amount above $1 million, matching the top individual bracket. Your W-4 does not change this. The first $1 million follows the ordinary rules.³

Nebraska State Withholding on Your Bonus

Flat 3.5% When the Bonus Is Broken Out

When your bonus is paid separately, or its amount is specifically identified on a combined check, Nebraska allows employers to apply a flat 3.5% state withholding rate.² The Nebraska Tax Commissioner sets this rate for supplemental payments including bonuses, commissions, overtime, and sales awards.⁴

Aggregate Method for Blended Checks

If the bonus is folded into your regular pay without being separately identified, the employer treats the combined amount as one wage payment and withholds using Nebraska’s standard tables.⁵ Nebraska’s 2026 percentage-method rates run from 2.26% to 4.60% depending on the pay-period total and filing status.⁶ For higher earners, this often withholds a bit more than the flat 3.5% would.

Social Security and Medicare on Bonuses

FICA payroll taxes apply to every bonus regardless of which income tax method your employer picks.

Social Security: 6.2% on your bonus, until your total 2026 earnings from the employer reach the wage base of $184,500. Above that, no more Social Security tax comes out.⁷
Medicare: 1.45% on the whole bonus, no cap.
Additional Medicare Tax: an extra 0.9% once your total compensation for the year passes $200,000. Employers start withholding it at that threshold regardless of filing status, though the actual tax kicks in at $250,000 for married joint filers when you file.⁸

If you have already crossed the Social Security wage base for the year before your bonus lands, that 6.2% disappears from the calculation and your take-home is noticeably larger than it would be earlier in the year.⁷

What a $5,000 Bonus Actually Nets You

Say you earn $70,000 in salary and get a $5,000 bonus paid on its own check, with the flat methods applied at both the federal and state level:

Federal income tax: $5,000 × 22% = $1,100¹
Nebraska income tax: $5,000 × 3.5% = $175²
Social Security: $5,000 × 6.2% = $310⁷
Medicare: $5,000 × 1.45% = $72.50

Total withheld: $1,657.50. Net deposit: about $3,342.50, or roughly 33.2% of the gross gone to taxes. Under the aggregate method the federal and state pieces could shift up or down with your regular pay and filing status, but the FICA numbers stay the same.

Non-Cash Bonuses and Gift Cards

A non-cash bonus is still taxable. If your employer gives you electronics, a vacation, or event tickets, the fair market value gets added to your W-2 wages and runs through the same federal, state, and FICA withholding.⁹ Fair market value is what you would pay a third party for the item, not your employer’s cost.

Gift cards are not a workaround. The IRS specifically bars treating cash equivalents as a de minimis fringe benefit, so a $25 restaurant gift card is fully taxable. Genuinely small non-cash items like a holiday ham, flowers, or a company mug can be excluded as de minimis.⁹

What Happens When You File Your Return

Withholding is a prepayment, not the final tax. On your federal Form 1040, the bonus is added to your other income and taxed at the 2026 brackets, which run from 10% on income up to $12,400 for single filers to 37% on income above $640,600 (or above $768,700 for married filing jointly).¹⁰ On Nebraska Form 1040N, the bonus is added to your other Nebraska income and taxed under the state brackets, topping out at 4.55% for 2026.¹¹

If the flat 22% and 3.5% took out more than you actually owe, the difference comes back as a refund. If they took out less than your marginal rate, you may owe.

Watch for Underpayment Penalties

A big bonus can push you past the point where regular withholding is enough. Nebraska charges an underpayment penalty when the tax owed after withholding exceeds $300, unless you paid at least 100% of last year’s tax or at least 90% of this year’s. Withholding from the bonus itself counts toward that safe harbor.¹² If you are worried about a shortfall, you can make an estimated payment or ask payroll to withhold extra from later checks.

If You Work in Nebraska but Live Elsewhere

Nonresidents who perform services in Nebraska have state tax withheld on the portion of wages and bonuses tied to work done in the state. All work in Nebraska means the full bonus is withheld on. Split work can be allocated by filing Form 9N with your employer, with hourly employees allocating by hours and salaried employees by working days.¹³ Your home state generally gives a credit for the Nebraska tax so the same dollars are not taxed twice, though the mechanics depend on that state’s rules.

1
Internal Revenue Service. Publication 15 (2026), Employer’s Tax Guide
2
Revenue.Nebraska.gov. 2026 Nebraska Circular EN
3
eCFR. 26 CFR 31.3402(g)-1 – Supplemental Wage Payments
4
Nebraska Legislature. Nebraska Revised Statute 77-2753
5
Cornell Law School. 316 Nebraska Administrative Code Ch. 21 Section 004 – Determining the Amount of Income Tax Withholding
6
Revenue.Nebraska.gov. Nebraska Income Tax Withholding Percentage Method Tables
7
Social Security Administration. 2026 Cost-of-Living Adjustment Fact Sheet
8
Internal Revenue Service. Topic No. 560, Additional Medicare Tax
9
Internal Revenue Service. Employer’s Tax Guide to Fringe Benefits (2026)
10
Internal Revenue Service. IRS Releases Tax Inflation Adjustments for Tax Year 2026
11
Office of the Governor. Gov. Pillen’s Historic Income Tax Cuts Effective in January
12
Cornell Law School. 316 Nebraska Administrative Code Ch. 20 Section 007 – Penalty: Underpayment of Estimated Tax
13
Cornell Law School. 316 Nebraska Administrative Code Ch. 21 Section 006 – Determining Income Tax Withholding on Wages Paid to a Nonresident