What is the one-time federal income tax withholding rate applied to bonuses and lump-sum payments?

The one-time federal income tax withholding rate applied to bonuses and lump-sum payments is 25%. This rate is specifically established by the IRS for such payments, allowing employers to withhold a predetermined percentage rather than calculating an individual's tax bracket based on their overall income. This approach simplifies the withholding process for employers and helps ensure that sufficient taxes are withheld upfront for these typically larger and less frequent payments, which could otherwise push individuals into higher tax brackets if added to their regular income. Understanding this withholding rate is crucial for both employees receiving bonuses and for employers responsible for payroll, ensuring compliance with federal tax laws.