Why Was So Much Tax Taken from My Bonus in Texas?

By Team SalaryCalculate · 7/22/2025

You just got a bonus—great news. But when you saw your paycheck, a big chunk was missing. Where did it go?

In Texas, bonuses are taxed like income. But they’re often hit harder upfront because of how employers handle withholding. For 2025, that withholding rate can be as high as 22% federally, and that’s before other deductions like Social Security, Medicare, and possibly 401(k) contributions. Even though Texas doesn’t have a state income tax, your bonus might still look smaller than expected.

It feels frustrating. You're not alone. Whether it was a $1,000 bonus or a $10,000 windfall, it’s common to feel blindsided by how much tax gets taken out. This article breaks it all down. Why it happens. How the IRS treats bonuses. And what you can do to keep more next time.

Why Bonuses Feel Over-Taxed

Let’s start with what makes bonuses different from your normal pay check. The IRS considers bonuses “supplemental wages.” They’re taxed—sometimes at a higher rate—depending on how your employer handles them.

Two Main Ways Bonuses Get Taxed

1. Percentage Method (Most Common)
This is the standard IRS method. For 2025, the flat federal withholding rate is 22%.

2. Aggregate Method
Your employer adds the bonus to your regular wages and withholds tax as if it were a single big pay check. This can push you into a higher bracket temporarily—especially if the bonus is large.

Bonus Tax Example in Texas (2025)

Is That Money Gone Forever?

Not necessarily. Think of the 22% federal withholding as a placeholder. When you file your tax return, the IRS will calculate your actual tax owed for the year. If they withheld too much on your bonus, you’ll get a refund.

Can I Reduce Taxes on My Bonus?

Yes, sometimes.

1. Contribute to Your 401(k)

If your employer allows, ask to have part of your bonus go into your 401(k). That reduces your taxable income. It won’t be taxed now—it grows tax-deferred. Read more in: do bonuses count toward 401k in texas

2. Use Salary Sacrifice or Deferral

High earners may have the option to defer bonus income into future years. This usually only applies to executives or structured plans.

3. Adjust Your W-4

You can temporarily adjust your W-4 to increase withholding on your regular paycheck—then reduce bonus withholding. Talk to HR or payroll about this first.

Other Things That Might Be Withheld from Your Bonus

Even if you’ve opted out elsewhere, bonuses might still be subject to:
- Health insurance premiums
- HSA or FSA contributions
- Garnishments (like child support or tax debts)
- Local taxes (if working in other jurisdictions)

Real-World Scenarios

Scenario 1: Texas Tech Worker, $3,500 Bonus
Jorge earns $4,000/month. He gets a one-time $3,500 bonus in March. His employer uses the flat 22% method.
- Federal tax: $770
- Social Security + Medicare: $267.75
- Net bonus: $2,462.25
He’s frustrated, but after adjusting his 401(k) contributions and filing his taxes in April, he gets $300 of it back.

Scenario 2: Dallas Sales Rep, $10k Commission
Melissa gets $10,000 in quarterly commission. Her employer adds it to her $5,000 base and uses the aggregate method.
- Taxes withheld: 28% total
- Net bonus: $7,200
Melissa is in the 24% bracket anyway, so this aligns with her actual rate—no refund expected.

Frequently Asked Questions

Why did my bonus get taxed higher than my salary?
Because it’s taxed separately as “supplemental income.” Employers often withhold 22% upfront, regardless of your actual tax bracket.

Will I get that tax money back?
Maybe. If the withholding was too high, you’ll get a refund when you file your tax return.

Can I avoid the 22% withholding?
You can’t avoid it entirely, but you can reduce taxable income by contributing to a 401(k) or HSA.

What if I never got taxed on past bonuses?
Some employers include bonuses in regular paychecks. Others withhold manually. It varies by payroll setup.

How do I check how much tax was taken?
Your pay stub should show separate lines for federal withholding, Social Security, and Medicare on your bonus.

Wrapping Up

Getting a bonus should feel like a win. But when the tax hits hard, it can take the shine off. The key is understanding how it works and what you can do about it.

If you're still unsure, use the Texas bonus calculator to break down your bonus withholding. Or try the Texas net salary calculator if your bonus was combined with your salary.

Got a bonus coming up? Ask HR about your options before payday. A little planning can save you a lot in taxes.

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