How Virginia withholds on a bonus
Virginia lets employers withhold a flat 5.75% on supplemental wages paid separately, the state's top rate, which applies to nearly all wage income since the bracket begins at $17,000 of taxable income. On a $10,000 bonus the percentage method withholds $2,200 federal, $620 Social Security, $145 Medicare and $575 Virginia, leaving $6,460. There are no local income taxes in Virginia.
Because almost everything is at 5.75% anyway, the aggregate method changes Virginia's line only marginally and raises the federal line to about $2,700 for a $60,000 earner paid every two weeks. The $8,750 standard deduction and $930 exemption have been used up by salary, so a bonus is taxed at the full 5.75% on the return and the state withholding settles even.
What the withholding means for your Virginia return
Any refund on a Virginia bonus is federal: a $60,000 single filer's marginal federal rate is 12% up to $50,400 of taxable income and 22% above, so a $10,000 bonus is really taxed at about $1,450 federal against $2,200 withheld, and roughly $750 returns. Residents of DC, Kentucky, Maryland, Pennsylvania and West Virginia who earn a bonus in Virginia are withheld for their home jurisdiction under reciprocity. The Virginia paycheck calculator shows the marginal rates for any salary. Exemptions on Form VA-4 do not reduce the flat 5.75% withheld from a separately paid bonus; they apply only under the aggregate method. Virginia's brackets have not changed since 1990, so neither has the top rate the bonus rate tracks.