What is the supplemental federal withholding rate for earnings less than $1 million?

The supplemental federal withholding rate for earnings less than $1 million is 22%. This rate applies to supplemental wages such as bonuses, commissions, and other forms of payments outside of an employee's regular salary. The IRS established this flat withholding rate to simplify the process for employers when paying supplemental wages.

It is important to note that while the supplemental rate can vary based on circumstances, the current standard for most supplemental payments is set at 22%. This makes it a straightforward choice for employers to apply during payroll processing, ensuring compliance with IRS guidelines. Additionally, knowing this rate helps payroll professionals accurately calculate withholding amounts for employees receiving these types of earnings, which is critical for effective payroll management.