What is Supplemental Payroll? Types and Importance
Supplemental pay is monetary compensation given to the employee in addition to their regular base salary. Supplemental wages are different from regular wages because of how it is taxed. If an employee is paid the supplemental wages as regular pay, then it would be taxed at the same rate. However, if it is paid out separately, it can be taxed at a separate rate or at an aggregate rate.?
The supplemental tax rate varies from state to state, so it is important for employers to figure out what their state’s supplemental tax rate is.?
Types of supplemental pay??
Some examples of supplemental wages include:?
Here are some examples of what does not qualify as supplemental pay:
Why is supplemental pay important???
Some types of supplemental pay are required by law while others can serve as a great incentive for employees. Understanding the different types of pay and how they impact employees and taxes is important for all business owners.?
If you have any questions regarding supplemental payroll, reach out to us at [email protected].