For payroll tax purposes, the IRS distinguishes between regular wages and supplemental wages.
Regular wages are payments made for routine work performed during a pay period. These wages are typically subject to standard payroll tax withholding using normal tax tables. Examples of regular wages include hourly wages, salary payments, and overtime pay.
Supplemental wages are payments made in addition to an employee’s regular earnings. These payments may be taxed differently depending on how they are issued. Common examples of supplemental wages include bonuses, commissions, PTO payouts, severance pay, certain taxable fringe benefits, amongst others.
⚠️Note: This information is for informational purposes only and does not constitute formal tax, legal, or compliance advice. Always consult with qualified tax advisors, legal counsel, and your organization’s internal teams for guidance specific to your situation. Additional regulations may apply. For the most accurate and up-to-date information, refer to official government resources and regulatory agencies.