Supplemental wages are payments made in addition to an employee's regular wages. IRS Publication 15 lists overtime pay among them, although it lets employers choose to treat overtime as regular wages instead. When supplemental wages are identified separately from regular pay, an employer may withhold a flat 22% of the payment for federal income tax; the rate is 37% on the part of a year's supplemental wages above $1 million. Social Security and Medicare tax apply regardless of the method.
Example
A $600 overtime payment withheld at the flat rate has $132 of income tax withheld ($600 × 0.22). Employee Social Security and Medicare tax add $45.90 (7.65%). Withholding is only an advance: the tax owed is set on the annual return, so a person whose actual rate is below 22% gets the difference back.
Common mistake
Reading a large withholding on a bonus as a higher tax rate on that bonus. The bonus is taxed with the rest of annual income; only the withholding method differs. See the overtime guide or the paycheck calculator. This is educational, not tax advice.