Taxation percentages – Supplemental wages reminder offered

The Postal Service is reminding employees that the percentages used to tax supplemental wages differ from normal taxation percentages.

Supplemental wages can include:

  • Annual leave exchanges
  • Awards
  • Back-pay awards
  • Prizes
  • Severance pay
  • Reimbursements for nondeductible moving expenses

Currently, supplemental wages are subject to a withholding rate of 22 percent.

There’s also a mandatory withholding rate of 37 percent — or the highest rate of income tax for the year — for any supplemental wages paid in excess of $1 million within a calendar year.

Congress and the IRS determine taxation percentages.

The Postal Bulletin’s Jan. 16 edition has more information.


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