Percent of Taxable Gross

Calculate the tax to be withheld on supplemental wages by using the special flat rate specified by the state, without regard for tax status or allowances.

This method may apply both to supplemental wages paid with normal wages and to supplemental wages paid separately.

Example

An employee subject to Indiana withholding is to be paid a $4000 bonus. Using the flat rate of 3.4 percent specified by Indiana for supplemental wages, calculate the Indiana tax to be withheld on the bonus:

3.4% X $4000 = $136