Bonus and Commission on a Pay Stub: How to List Them
Where bonus and commission lines belong on a pay stub, how placement decides the 22% flat rate vs. aggregate withholding, and how to show YTD correctly.
This article is general information about payroll documentation, not tax or legal advice. Federal figures are current for 2026. Check with a CPA or your state labor department before applying any of it to a real payroll run.
A $3,000 bonus can produce two different federal withholding numbers on two otherwise identical paychecks. Same employee, same W-4, same pay period, same $3,000.
The variable isn’t the employee’s bracket. It’s where the employer put the line on the stub.
Almost nobody explains that part. Plenty of articles will tell you the IRS has two withholding methods. Very few mention that the stub layout is what picks between them. If you’re building a pay stub with a bonus or commission row on it, that’s the thing you actually need to know.
Bonus vs. commission: same tax bucket, different trigger
Start with the definitions, because they diverge in one place that matters a lot later.
A commission is compensation tied to a sales formula: a percentage of revenue, a flat amount per unit, a tiered rate that steps up at quota. It can be someone’s entire pay, a supplement to a base salary, or paid against a draw. The defining feature is that the amount follows a rule.
A bonus is an award. The IRS doesn’t care much beyond that, but the Department of Labor splits bonuses in two:
- Non-discretionary bonuses are announced in advance with knowable conditions. Production bonuses, attendance bonuses, safety bonuses, quota bonuses, retention bonuses tied to a stated date. The employee can work toward it.
- Discretionary bonuses are a genuine surprise. The employer decides both the fact and the amount after the fact, with no promise made in advance. A spot award handed out because the quarter went well.
For federal income tax withholding, all of it lands in one bucket: supplemental wages, defined in IRS Publication 15 §7. Bonuses, commissions, overtime pay, severance, accrued PTO payouts, back pay, prizes, retroactive raises. Same rules across the board.
For overtime, the discretionary split matters enormously. I’ll come back to it.
Where the bonus and commission lines go on the stub
Both belong in the earnings section, above the totals, each as its own row with a current-period amount and a year-to-date amount.
A typical earnings block looks like this:
| Description | Rate | Hours | Current | YTD |
|---|---|---|---|---|
| Regular | 20.00 | 80.00 | 1,600.00 | 20,800.00 |
| Overtime | 30.00 | 5.00 | 150.00 | 1,275.00 |
| Commission | 842.50 | 9,318.75 | ||
| Bonus | 3,000.00 | 3,000.00 | ||
| Gross Pay | 5,592.50 | 34,393.75 |
Two things about that block are easy to get wrong.
Commission and bonus rows are usually flat-amount rows, not hours times rate. There’s no meaningful hourly rate on a $842.50 commission. But if the worker is non-exempt, the hours still have to appear somewhere on the stub, on the Regular and Overtime rows, because several states require hours at each rate.
Both roll into gross pay. They’re in the current-period gross, the year-to-date gross, and eventually in Box 1 of the W-2. The W-2 doesn’t break them out; they’re blended into total wages. Your stub is the only document that ever shows them separately, which is exactly why the stub layout matters.
Common earnings codes
Stub abbreviations vary by payroll system, but a handful show up everywhere:
BONUS,BON: bonus or incentive paymentCOMM,COMMISSION: commission earningsINCENT,SPIFF,SPIF: short-term sales incentiveDRAW: an advance against future commissionDRAW REC,DRAW RECOV: recovery of a previously paid draw
That last one trips people up constantly. A recoverable draw is an advance the employer expects back out of future commissions. When it’s recovered, it belongs in the deductions section, not as a negative earnings row. Putting a negative number in earnings understates gross pay, which cascades into wrong YTD gross, wrong taxable wages, and a stub that won’t reconcile against the W-2. A non-recoverable draw is just guaranteed pay and never gets recovered at all.
If your stub has a mislabeled or missing row, fixing it is its own small procedure. See how to correct a pay stub and common pay stub errors.
How the line placement picks the withholding method
Now the mechanism most write-ups skip.
IRS Pub. 15 §7 gives employers two ways to withhold federal income tax on supplemental wages:
The percentage method, the flat 22% one: withhold 22% on the supplemental amount, independent of the employee’s Form W-4. Simple, predictable, and the method most payroll systems default to.
The aggregate method: add the supplemental wages to the regular wages for the period, treat the combined amount as one payment, and run it through the Pub. 15-T withholding tables with the employee’s W-4. Slower to compute, and it tracks the employee’s actual bracket more closely.
You don’t get a free choice between them. The flat method is available only if two conditions hold:
- The supplemental wages are paid separately, or combined with regular wages but separately identified in the payroll records, and
- Federal income tax was withheld from the employee’s regular wages in the current or preceding calendar year.
Read condition 1 again. “Separately identified in the payroll records” is a documentation requirement, and the pay stub is the readable face of those records. A distinct Bonus row with its own current amount and its own YTD column is what separate identification looks like on paper. A single blended Regular row of $5,500 with the bonus folded invisibly inside it is not.
So the layout isn’t cosmetic. It’s evidence of the method you elected.
The same $3,000 bonus, two stubs
Take a single filer with no dependents, biweekly regular wages of $2,500, and a $3,000 bonus in one period.
| Stub A: separate Bonus row | Stub B: merged into Regular | |
|---|---|---|
| Regular earnings | $2,500.00 | $5,500.00 |
| Bonus earnings | $3,000.00 | (not shown) |
| Gross pay | $5,500.00 | $5,500.00 |
| Method available | Percentage (flat 22%) | Aggregate only |
| Federal income tax | $216.15 + $660.00 = $876.15 | $886.69 |
| Social Security (6.2%) | $341.00 | $341.00 |
| Medicare (1.45%) | $79.75 | $79.75 |
Stub A: $3,000 × 22% = $660 on the bonus line, plus the $216.15 that the $2,500 of regular wages would have drawn on its own.
Stub B: the whole $5,500 runs through the aggregate calculation. Annualized, $5,500 × 26 = $143,000; subtract the 2026 standard deduction of $16,100 for a single filer to get $126,900; run the 2026 single brackets (10% to $12,400, 12% to $50,400, 22% to $105,700, 24% to $201,775) for $23,054 of annual tax; divide by 26 periods for $886.69. That’s the same arithmetic the Pub. 15-T percentage-method table performs: the 2026 Single standard schedule starts its brackets $7,500 above the statutory floors and Worksheet 1A subtracts $8,600, which together reproduce the $16,100 standard deduction exactly. Run it the IRS way and you get the same $886.69.
Two things to take away.
The difference is small, and it’s a timing difference rather than a cost. $10.54 here. Both stubs report the same $5,500 of gross wages, the same taxable wages, and the same W-2 Box 1 amount at year end. Annual tax owed is identical. All that changed is how much was pre-paid in May.
FICA does not move. Social Security at 6.2% and Medicare at 1.45% apply to supplemental wages exactly as they apply to regular wages, regardless of which income-tax method you picked. $341.00 and $79.75 on both stubs, to the cent. This is the part readers most often assume changes, and it never does. If you want to check FICA on a specific gross, the FICA tax calculator will do it.
The $1,000,000 rule, and “did I overpay?”
The flat 22% applies to cumulative supplemental wages up to $1,000,000 per employee per calendar year. On the portion above $1 million, the rate is a mandatory 37%, and the employee’s Form W-4 is ignored entirely. There’s no election there; it’s required.
Below that threshold, most articles botch the framing. 22% is a withholding rate. Nothing about a bonus makes it taxed at a higher rate than any other dollar of wages; the IRS is just estimating your liability with a blunt instrument.
Whether that estimate is high or low depends on where you actually land in the 2026 single-filer brackets:
| Marginal rate | Taxable income (single, 2026) | What 22% withholding did |
|---|---|---|
| 10% | $0 – $12,400 | Heavily over-withheld |
| 12% | $12,400 – $50,400 | Over-withheld |
| 22% | $50,400 – $105,700 | About right |
| 24% | $105,700 – $201,775 | Slightly under-withheld |
| 32% | $201,775 – $256,225 | Under-withheld |
| 35% | $256,225 – $640,600 | Under-withheld |
| 37% | $640,600+ | Under-withheld |
(Taxable income is after the standard deduction, which is $16,100 single and $32,200 married filing jointly for 2026.)
If you’re in the 12% bracket and 22% came off your bonus, you didn’t lose that money. You lent it to the Treasury until you file.
The Q4 surprise: the Social Security wage base
This quirk generates a lot of confused questions every December.
Social Security stops at the wage base: $184,500 for 2026 (up from $176,100 in 2025). Once your YTD wages cross it, the 6.2% line goes to zero for the rest of the year. Medicare keeps going with no cap, and the 0.9% Additional Medicare Tax kicks in above $200,000 single, $250,000 married filing jointly, or $125,000 married filing separately.
So a big Q4 bonus can net more than the employee expected. The tax rules didn’t bend; the bonus straddled the wage base. Say YTD wages are $180,000 and a $10,000 bonus lands. Only $4,500 of it is subject to Social Security ($279 instead of $620). That $341 difference has nothing to do with the bonus being a bonus, and everything to do with the calendar.
Which is the whole argument for keeping a clean YTD column on every earnings row. If you’re reconstructing YTD across a year of stubs, the YTD earnings calculator handles the running totals.
Commissions, non-discretionary bonuses, and the overtime true-up
Almost nobody writes this section, and it’s the one most likely to cost an employer money.
Under the FLSA, overtime is 1.5 times the regular rate, and the regular rate is not the same thing as the hourly rate. It’s total straight-time compensation for the workweek divided by hours worked. Commissions go into it. 29 CFR 778.117 is unambiguous: commissions count toward the regular rate “regardless of whether the commission is the sole source of the employee’s compensation or is paid in addition to a guaranteed salary… and regardless of the method, frequency, or regularity of computing, allocating and paying the commission.”
Non-discretionary bonuses work the same way, per DOL Fact Sheet #56C. Truly discretionary bonuses are excluded.
That “regardless of frequency” clause is the trap. A commission paid monthly still has to be attributed back to the workweeks that earned it, and any overtime worked in those weeks gets recomputed.
A worked true-up
An hourly worker at $20.00/hr works 45 hours in a week and earns a $300 commission attributable to that week.
The paycheck as normally run:
- 45 hours × $20.00 = $900.00 straight time
- Overtime premium already paid: 5 OT hours × $10.00 (the half-time premium on $20) = $50.00
Now add the commission. Straight-time compensation for the week becomes $900 + $300 = $1,200. Regular rate = $1,200 ÷ 45 = $26.6667/hr.
The commission raised the regular rate by $300 ÷ 45 = $6.6667/hr. Half of that is $3.3333, owed on each of the 5 overtime hours:
Additional overtime due: $16.67.
Small number. That’s the point. It looks like a rounding error, and it’s still a wage violation once you multiply it across a sales floor and two years of paychecks.
That $16.67 needs its own stub line. Label it OT TRUE-UP or COMM OT ADJ, give it a current amount and a YTD amount, and the record explains itself to anyone who audits it later. Bury it inside the commission row and nobody, including you in eighteen months, can prove the overtime was paid.
When a commission covers a period longer than one workweek and can’t be tied to specific weeks, 29 CFR 778.209 lets you allocate it across the weeks in the period, typically equally, and recompute the premium for each week with overtime.
State rules, records, and building the stub
Federal law doesn’t require you to hand out a pay stub at all. State law usually does, and several states are specific about itemization.
California is the strictest common case. Labor Code 226 requires nine items on every wage statement, including gross wages earned, all applicable hourly rates in effect during the period, and the corresponding hours worked at each rate. A blended earnings row fails that test. Separately, Labor Code 2751 has required since 2013 that any commission arrangement be in a written contract stating the method by which commissions are computed and paid, with a signed receipt from the employee.
Other states have their own itemization lists. Our pay stub requirements by state roundup covers who requires what.
The practical checklist
- One row per earning type.
Regular,Overtime,Commission,Bonus,OT True-Up. Never merge them to save space. - A YTD amount on every row, not just on gross pay. Lenders and underwriters read those columns, and they average lumpy commission income over 24 months precisely because they need the history.
- Consistent labels across periods. If it’s
COMMin March it’sCOMMin September. Inconsistent codes are what makes a stub history unreadable. - Draw recovery in deductions, not as negative earnings.
- Keep the commission calculation backup: the sales report, the rate schedule, the signed agreement.
- Round once, at the end. Commission is often a percentage of a sale, and 4.75% of $63,412.50 is $3,012.09375. Round it once to $3,012.09; don’t round intermediates.
Doing it in Payslip44
Payslip44 maps directly onto all of this. An earnings row takes either hours and a rate or a flat amount, plus a per-line YTD figure and a taxable flag, which is exactly the shape a bonus or commission line needs. Draw recovery goes in as a deduction row with its own category, where it belongs.
Recurring lines are the part that saves real time. A saved item template for “Monthly Commission” or “OT True-Up” drops in every period without retyping, alongside your saved employer and employee details. If you run several sales staff on the same structure, reusable templates are the difference between five minutes and an hour.
The money math runs in decimal, not floating point, which matters more than it sounds like it should when commission percentages compound across a year of stubs and a $0.01 drift per period turns into a YTD total that won’t reconcile. Everything happens on-device, and exports go out as PDF, PNG, CSV, or text.
One last employer question that comes up constantly: “I want the rep to actually receive $1,000 from this bonus.” That’s a gross-up, where you solve backward from the net to find the gross that covers the withholding. The gross-up calculator does the arithmetic.
The short version
Give bonus and commission their own rows. Give every row a YTD column. Put draw recovery in deductions. Add an overtime true-up line whenever a non-exempt worker earned commission in a week with overtime.
Do that and the stub does three jobs at once: it satisfies the state itemization statute, it documents the withholding method you elected, and it proves the overtime math to anyone who asks two years from now.
Payslip44 builds stubs line by line on your device, with per-line YTD, taxable flags, saved item templates, and decimal-precise money math. Download it and put the bonus on its own row.
Frequently Asked Questions
Do bonuses and commissions have to be listed separately on a pay stub?
Federal law doesn't mandate a pay stub at all, but most state wage-statement laws require each earning type to be itemized. Separately identifying the supplemental payment is also what lets the employer use the flat 22% percentage method for federal withholding.
Why was my bonus taxed at 22%?
It wasn't taxed at 22%. That's the IRS flat withholding rate for supplemental wages up to $1 million a year, not your actual tax rate. It gets reconciled against your real bracket when you file your return.
Are bonuses and commissions included in gross pay?
Yes. Both are wages, so they're in the current-period gross, the year-to-date gross, and W-2 Box 1. They are not broken out separately on the W-2.
What's the difference between a bonus and a commission on a pay stub?
A commission is tied to a sales formula; a bonus is a milestone or discretionary award. Both are supplemental wages for withholding, but only non-discretionary bonuses and commissions count toward the FLSA overtime regular rate.
Do commissions affect overtime pay?
Yes. Commissions must be included in the regular rate under 29 CFR 778.117, so a non-exempt worker who earns commission and works overtime is owed a retroactive overtime adjustment for the weeks the commission covers.
What does COMM or BONUS mean on my pay stub?
COMM is commission earnings; BONUS is an incentive or award payment. Both appear as rows in the earnings section with their own current-period and year-to-date amounts.
Is Social Security and Medicare withheld from a bonus?
Yes. FICA applies to supplemental wages exactly as it does to regular wages: 6.2% Social Security up to the 2026 wage base of $184,500 and 1.45% Medicare with no cap.