Bonus Withholding Rate 2025. Employers deduct tds on bonus payments based on the employee's total income, including the bonus. Under tax reform, the federal tax rate for withholding on a bonus was lowered to 22%, down from the federal income tax rate of 25%.


Bonus Withholding Rate 2025

Starting from april 1, 2025, if a firm makes any payments to its partners, it must deduct tds at 10% if the payment amount exceeds the threshold limit of 20,000. However, employers could instead combine a bonus with your regular wages as though itโ€™s one of your usual.

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