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The Federal rate on bonus checks is 25% by law. They are also subject to SS and Medicare at 7.65%. Most states also stipulate a mandatory withholding rate on bonuses.
The reason for it is that in the past many taxpayers had too little withheld and wound up owing when they filed. Some would rush to the payroll office and put in an updated Form W-4 claiming 20 allowances to reduce the tax withheld from the bonus and then change it back once the bonus was paid. Congress changed the law a couple of years ago to stop that type of abuse.It will all even out at tax time when you file your return. Sorry, but that's just the way that the laws are written.
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