22% federal supplemental
Also: 22% supplemental, 22 percent supplemental withholding, 22% federal supplemental rate
The flat 22% federal withholding rate that employers apply to supplemental wages (bonuses, RSU vests, NSO exercises) up to $1 million per employee per calendar year.
The 22% supplemental rate is the default federal withholding on supplemental wages below $1 million in a calendar year, set by the Treasury and indexed to the third-lowest individual tax bracket. The rate applies uniformly regardless of the employee’s projected annual income or marginal bracket, so a senior engineer in the 32% bracket and a first-year analyst in the 22% bracket see the same 22% withheld on their bonuses.
Example: a senior product manager earns $320,000 in base salary plus a $180,000 RSU vest. The $180,000 is withheld at 22% ($39,600 federal). Her actual federal tax on the $180,000 at the 32% marginal rate is $57,600. The $18,000 gap must be closed by additional W-4 withholding on wages, a Q4 estimated tax payment, or at April filing.
Common mistake: planning cash flow around net-of-withholding proceeds. The 22% leaves a large filing liability for dual-income households and high earners, commonly $20,000 to $80,000 depending on bracket and state.
The 22% rate matters at every supplemental wage event, which for tech employees is multiple times per year, and it is the primary reason to run a quarterly tax projection.