An Ontario employee earning $80,000 who receives a $5,000 bonus keeps about $3,377 after tax and contributions. Extra income tax takes $1,423 and extra CPP takes $200, which adds up to 32.5% of the bonus.
Bonuses are taxed like pay
There is no special rate for bonuses in Canada. The money is added to your income for the year and taxed at your marginal rate. Only the withholding differs at first. That can make the bonus look smaller on the pay stub than it really is, even though the final tax follows the same rules as your salary.
What the calculator does
It works out your tax, CPP and EI on your salary, then runs the numbers again with the bonus added. The gap is what the bonus costs you. What is left is yours. Enter your salary as the base, because the bonus sits on top of it.
Why the rate is not one number
At $80,000 your marginal rate is 29.65%. The bonus also moves you closer to the CPP earnings ceiling. In the example the extra CPP is $200, since the second CPP band runs from $74,600 to $85,000. EI stops at $68,900, so it adds nothing here.
Withholding and refunds
An employer may hold back more from a large bonus than the final tax turns out to be. You get the excess back when you file. If they withhold less, you could owe money later. The calculator shows the final tax. Not the amount taken on the day.
Putting the bonus to work
An RRSP contribution can offset the tax. Some employers will send part of the bonus straight to your RRSP with no tax withheld at source. On a $5,000 bonus at a 29.65% marginal rate, contributing all of it removes about $1,482 of tax.
A bigger bonus
Try $20,000 on the same $80,000 salary. Extra income tax climbs to roughly 30 to 35% of the bonus, because part of it lands in higher brackets. CPP adds only a little, as it stops at $85,000. A plan matters more as the bonus grows.
Bonus or raise
Tax treats both the same way, but a raise repeats every year and lifts what you earn later. Employers sometimes offer one in place of the other, so it pays to know what each is worth to you once tax has been taken off on the cheque alone. Compare them after tax. Then think about which you would want over several years.
Limits and records
The estimate leaves out union dues, benefit premiums and pension contributions. It covers Ontario residents only, so Quebec is out, and retiring allowances and severance follow other rules. Keep the pay stub for the bonus and your T4 at year end. Box 22 shows the tax withheld. If part went into an RRSP, hold on to the receipt, since it backs your deduction.
Where to go next
To see the tax on your salary, use the income tax calculator. The RRSP calculator shows what a contribution saves. For your regular cheque, try the payroll deductions calculator.
Frequently asked questions
How is a bonus taxed in Ontario?
As regular income at your marginal rate, plus CPP and EI up to the yearly limits.
How much of a $5,000 bonus do I keep at $80,000?
About $3,377 after tax and contributions.
Why is my bonus smaller on the pay stub?
Your employer may withhold a higher share at first. You recover any excess when you file.
Can I put a bonus into my RRSP?
Yes. Some employers allow it directly, with no tax withheld at source.
Does a bonus push me into a higher bracket?
Only the part above the threshold is taxed at the higher rate.
Does this cover Quebec?
No. Quebec has its own rules.
Sources and updates
Last reviewed: . Full disclaimer. How we build calculators. Editorial policy.
Estimate only. This calculator gives general information for planning. It is not tax, legal or financial advice, and it is not affiliated with the City of Toronto, MPAC or the Canada Revenue Agency. Results depend on the numbers you enter and may differ from official amounts. Check official sources or a qualified professional before you decide.