[dinabruce]

When taxing a bonus that is over 1,200, does it have to be taxed by law at 25% or do they actually go up to 33%.

[ebaines]

Withholding on bonuses is typically at 25%, as long as the bonus is identifed as a separate payment from your regular pay. The following is from IRS Pub 15, dealing with withholding on suppllemental income (i.e. bonuses):

1. If you withheld income tax from an employee's regular wages, you can use one of the following methods for the supplemental wages.

a. Withhold a flat 25% (no other percentage allowed).

b. Add the supplemental and regular wages for the most recent payroll period this year. Then figure the income tax withholding as if the total was a single payment. Subtract the tax already withheld from the regular wages. Withhold the remaining tax from the supplemental wages. If there were other payments of supplemental wages (after the last payment of regular wages but before the current payment of supplemental wages), aggregate all the payments, calculate the tax on the total, subtract the tax already withheld from the regular wages and the previous supplemental wages, and withhold the remaining tax.

2. If you did not withhold income tax from the employee's regular wages, use method 1-b above. This would occur, for example, when the value of the employee's withholding allowances claimed on Form W-4 is more than the wages.

[AtlantaTaxExpert]

Ebaines covers it rather well.