Supplemental Pay Definition

Supplemental pay is compensation that is other than an employee’s regular wages or salary. Examples include bonuses and tips.

Supplemental Pay Extended Definition

Supplemental pay is additional money an employee can receive in addition to their regular wages, such as:

• Bonuses
• Tips
• Cashed-out vacation or sick time
• Prizes
• Retroactive pay raises

Employers need to know the proper amount of income taxes to withhold from supplemental wages, which will depend on the nature of the supplemental pay. There is a flat supplemental tax rate of 22% that employers may be able to use for withholding.

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Last Updated By

Rachel Blakely-Gray | May 01, 2023