An off-cycle payroll is any payroll run outside the regular pay schedule, such as a final paycheck, a bonus, a commission payment, or a correction. It follows the same tax and reporting rules as regular payroll, but bonuses paid this way are often taxed with the 22% federal supplemental rate.
Key takeaways
- Common reasons are final pay, missed hours, bonuses, commissions, and fixing errors.
- State final paycheck laws often force an off-cycle run, sometimes on the day of termination.
- Off-cycle runs still need tax withholding, deposits, and reporting on Form 941 and the W-2.
- Payroll providers may charge per off-cycle run, so check pricing during evaluation.
How off-cycle payroll works
Most payroll systems let an admin create a separate run with its own pay date, select the employees, enter the amounts, and choose how to treat them for taxes. Bonuses and commissions are supplemental wages, so federal income tax can be withheld at a flat 22% if paid separately from regular wages, or 37% on supplemental wages above $1 million in the year (IRS Publication 15 (Circular E), Employer's Tax Guide). FICA still applies at normal rates.
Final paychecks are the most time-sensitive off-cycle runs. Some states, including California, require final pay at the time of an involuntary termination. Others allow until the next regular payday. Our final paycheck laws by state table lists each deadline.
Corrections are the other big category. When an employee was underpaid, an off-cycle check fixes it quickly instead of making them wait two weeks.
Off-cycle payroll example
A sales rep earns a $10,000 quarterly commission, paid in an off-cycle run on the 20th of the month. Payroll withholds federal income tax at 22% ($2,200), Social Security at 6.2% ($620), Medicare at 1.45% ($145), and state tax at the state's supplemental rate. The rep's net deposit is about $6,500 to $7,000 depending on the state.
If the same commission were added to a regular paycheck and withholding calculated on the combined amount, withholding could be higher or lower than 22%. Neither method changes the rep's actual tax for the year, only how much is withheld up front.
Why off-cycle payroll matters for employers
Off-cycle payroll is how you keep promises fast. An employee who was shorted on overtime shouldn't wait for the next cycle, and in many states the law won't let you. Prompt corrections also lower the risk of wage claims and penalties. California's waiting time penalty, for example, can add a day's wages for each day final pay is late, up to 30 days.
It also tests your payroll provider. Some charge a fee per extra run, some limit when you can submit, and some can't process same-day direct deposit. Ask about off-cycle speed and pricing during demos. Our payroll software buyer guide lists the questions.
Common off-cycle payroll mistakes to avoid
Skipping tax withholding on bonuses
Bonuses are wages. Income tax, FICA, and state taxes apply.
Paying final wages late
State deadlines are strict, and penalties can exceed the wages owed.
Forgetting retirement deferrals
If your plan defines compensation to include bonuses, deferrals must come out of the off-cycle check.
Not telling the employee
A surprise deposit with unfamiliar withholding generates questions. Send a short note.
Off-cycle payroll: questions people also ask
What is an off-cycle payroll?
How are off-cycle bonuses taxed?
Do off-cycle payrolls show up on the W-2?
When should an off-cycle payroll be used?
Do payroll providers charge for off-cycle runs?
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HRTally glossary entries are written by people who have run US payroll, benefits, and HR operations, then checked line by line against primary sources such as the IRS, Department of Labor, EEOC, and Bureau of Labor Statistics. Dollar limits and rates are for 2026 unless stated. We review every entry at least twice a year and whenever a rule changes. This page explains general rules and isn't legal or tax advice; state law can differ. Read our editorial standards.
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<blockquote>An off-cycle payroll is any payroll run outside the regular pay schedule, such as a final paycheck, a bonus, a commission payment, or a correction. It follows the same tax and reporting rules as regular payroll, but bonuses paid this way are often taxed with the 22% federal supplemental rate.</blockquote><p>Source: <a href="https://www.hrtally.com/hr-glossary/off-cycle-payroll/">HRTally HR Glossary, Off-cycle payroll</a></p>
Written by the HRTally Research Team
Our guides are written and reviewed by people with hands-on US HR, payroll, and HR technology experience. Legal and tax facts are checked against primary sources, such as the Department of Labor, IRS, EEOC, and USCIS, and linked at the end of each guide. Vendors never review or pay for our editorial content.