Definition
Off-cycle payroll is a payroll run processed outside an employer's regular pay schedule. Employers use it to pay bonuses, correct errors, issue final pay to departing employees, or pay new hires early. Each run is calculated, taxed, and recorded separately from the regular cycle but feeds the same tax filings.
Also known as: off-cycle payroll run, off-cycle pay run, special payroll run, manual check run
Key figures
United States (federal)As of Oct 13, 2026
- Flat withholding on bonuses and other supplemental wages
- 22%IRS Publication 15 (2026)
- When the higher rate applies
- Supplemental wages above $1 million in a yearIRS Publication 15 (2026)
- Withholding above $1 million
- 37%IRS Publication 15 (2026)
- Other taxes on an off-cycle bonus
- Social Security, Medicare and FUTA applyIRS Publication 15 (2026)
How it works
A payroll administrator opens a separate run, picks the employees affected and enters only the earnings or adjustments being paid. The system calculates withholding and deductions for that run alone, then pays by direct deposit or check on a date unrelated to the regular payday.
Tax treatment depends on the payment. Bonuses, commissions, back pay and similar amounts are supplemental wages. When they are paid in their own run, the employer can usually withhold income tax at a flat 22 percent, or add them to regular wages and withhold on the total. Once an employee's supplemental wages for the year pass $1 million, the excess is withheld at 37 percent. Social Security, Medicare and FUTA apply either way.
Corrections need care: an underpayment is usually fixed with a supplemental run, while an overpayment needs a recovery plan that follows state law. Final-pay and payday deadlines differ by state, and they trigger many off-cycle runs. Every run still flows into the quarterly and year-end tax filings and the general ledger, so record the reason for each one.
Example
A software company with 300 staff finds that a shift differential was left out for eleven employees last period. Payroll opens an off-cycle run on Wednesday, pays only the missing differential with the right taxes, and the money lands two days later instead of on the next regular payday.
How it differs from similar terms
Off-Cycle Payroll vs Payroll Tax. Off-cycle payroll is a timing and processing event, while payroll tax is the withholding and employer liability that every run, regular or off-cycle, generates.
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Facts as of Oct 21, 2026 · LeadChange Research Team
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- Federal, state and local tax filing
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- Off-cycle runs, corrections and final pay
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Frequently asked questions
What is an off-cycle payroll?
A payroll run processed outside the regular pay schedule, for one employee or a group. It is used for bonuses, commissions, corrections, final pay and new hires who missed the cutoff. The run is calculated and taxed on its own but feeds the same quarterly and year-end filings.
When should an employer run off-cycle payroll?
When money is owed before the next payday: an underpayment to correct, a bonus or commission paid on its own date, final pay that a state requires sooner, or a new hire who missed the cutoff. Avoid routine use, since every extra run adds processing and reconciliation work.
How are bonuses taxed in an off-cycle run?
A bonus paid on its own is a supplemental wage. The employer can usually withhold federal income tax at a flat 22 percent, and must use 37 percent on supplemental wages above $1 million in the year. Social Security, Medicare and FUTA still apply.
Is off-cycle pay taxed differently from regular pay?
The taxes are the same; the withholding method can differ. Supplemental wages paid separately may use the flat 22 percent rate instead of the W-4 tables, which can withhold more or less than the employee expects. The final tax is settled on the employee's annual return.
Do state payday laws affect off-cycle payroll?
Yes. Each state sets how often employees must be paid and how fast final pay is due after a resignation or a dismissal. Some deadlines fall before the next regular payday, which forces an off-cycle run. Check the rules of the state where the employee works.
How does payroll software handle off-cycle runs?
Most payroll software lets an administrator start a separate run, choose employees and earning types, and pick the withholding method for supplemental pay. Good tools keep the run in the same tax filings and the general ledger, and log who ran it and why.
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