For supplemental income over $1 million, what is the withholding rate?

For supplemental income over $1 million, the withholding rate applied is 37%. This rate aligns with the highest tax bracket established for federal income tax purposes, which is applicable to supplemental wages. Supplemental wages encompass various forms of additional income such as bonuses and commissions, and the federal government has categorized these earnings to ensure proper withholding aligns with the income levels of the recipients.

Understanding the application of withholding rates is crucial, particularly with high-income earners, as they often require precise calculations to meet tax obligations without under-withholding. Withholding rates for supplemental income ensure that individuals are contributing appropriately to their tax responsibilities based on their overall income levels. The other options represent either rates for different income thresholds or do not reflect the most current federal tax regulations pertaining to supplemental wages.