Supplemental wages differ from regular wages in regards to payment dynamics, the tax rate applied, and tax reporting. Payment schedule While regular wages are tied to a specific payroll period and typically paid on a monthly basis, supplemental wages can be paid regardless of the pay period. For example, an employer may choose to pay out quarterly or lump-sum bonuses or support an employee who moves for work by covering nondeductible moving expenses in a single payment. Mandatory vs. non-mandatory An employee’s regular wages are mandatory, but supplemental wages are not. It’s up to the employer to determine what type of supplemental pay they include within their compensation plan. In addition, rules on supplemental wages differ from state to state. While some types of supplemental pay might be mandatory in one state, they may not be required in another state, but rather the employment contract would define its scope. For instance, severance pay is not mandatory across the United States, but some employees may choose to include it in their standard remuneration offering.