Originally Posted by
DarkSideMoon
How? Your employer determines how much is taken out of each check based on your W-4. Some employers decide to take bonuses out at the supplemental 25% because it can sometimes result in actually withholding less than the aggregate method. The IRS doesn't force a company to withhold at that flat 25%. They have the option of a 25% withholding OR by simply adding it into your paycheck and withholding the same way as normal pay. As long as you aren't underpaying your taxes they don't care.
Now, if you withhold less than you owe the IRS, then you're going to be in trouble.
https://www.irs.com/articles/withholding-tax-basics
The company does not determine anything. The individual fills out a w4 for regular wages and the company uses a book that has the amount of the income and deductions entered and it tells the company how much to send to the irs.