Supplemental Wages

Supplemental Wages are additional payments to employees, such as bonuses or commissions, taxed differently from regular wages, often at a flat rate.

1. What are supplemental wages?
   Answer: They are additional payments like bonuses or commissions.
   
2. What is the tax rate?
   Answer: They are taxed at a flat 22% for federal up to $1 million in 2025.
   
3. What are examples?
   Answer: Examples include overtime pay or severance.
   
4. What are the benefits?
   Answer: They incentivize performance and retention.
   
5. How does HR handle them?
   Answer: HR calculates and reports them in payroll.