Nigeria Jobs Forum

Bonuses are taxed too hard since employers have to obey the IRS supplemental wage rules, which impose an overall 22 percent federal withholding rate and at the same time, pay every payroll and state tax. This may almost increase the overall withholding to almost 40% and reduce the size of the bonus on your paycheck. Yet this is not some special high tax, it is merely withholding. The actual amount of tax is paid at the end of the year, and most individuals have refunded if it was over withheld. The high taxation is perceived due to timing and not increased tax law.

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