Fundamental Payroll Certification (FPC) 2025 – 400 Free Practice Questions to Pass the Exam

The aggregate method applies specifically to supplemental wages for the purpose of calculating federal withholding. When an employer pays supplemental wages—such as bonuses, commissions, or overtime—this method allows them to combine these payments with the employee's regular wages to determine the total amount of income for withholding calculations.

Using the aggregate method, employers add the supplemental wage payment to the most recent regular paycheck, resulting in a higher total amount that reflects the employee's overall earnings for that pay period. This approach allows for withholding to be calculated at the employee's normal tax rate, which may be more beneficial for both the employer and employee in terms of tax withholding accuracy.

While there are other methods to calculate withholding on supplemental wages, such as the percentage method, the aggregate method is often preferred due to its simplicity and consistency with the overall payroll process.