Rock the 2025 FPC Exam – Master Payroll Fundamentals with Confidence!

The aggregate method is a way of calculating withholding on supplemental wages, such as bonuses or commissions, by combining those supplemental amounts with an employee's most recent regular wages in order to determine the total taxable income for that pay period. This method effectively treats both types of wages as one sum, which allows the employer to apply their regular payroll withholding rates to the total amount.

This approach contrasts with the specific percentage method, where supplemental wages are taxed at a flat rate. The aggregate method is advantageous for ensuring more consistent withholding aligned with the employee's overall wage level, as it takes the employee's regular pay into account when calculating withholding for the supplemental payment.

The other options do not align with the nature of the aggregate method: it does not inherently lead to higher tax deductions nor does it require separate reporting for supplemental wages. Additionally, it does not eliminate the need for tax filings; proper withholdings through the aggregate method still contribute to overall tax obligations that must be reported annually.