Bonus tax calculator Canada 2026

• The bonus method annualises your regular salary, works out the tax on it, adds the bonus, works out the tax again, and withholds the difference.
• CPP, CPP2 and EI are charged on the bonus up to the yearly maximums, so a bonus late in the year attracts less of them.
• This is what gets withheld, not what you finally owe. Your return settles the difference.
• No RRSP contribution, union dues or other deduction is applied to the bonus.

A bonus is not taxed at a special rate in Canada. Employers work out the withholding by pretending the bonus is spread across your year: annualise the regular salary, calculate the tax on it, add the bonus, calculate the tax again, and hold back the difference. The result is usually close to your marginal rate, which is why a bonus feels heavily taxed even though no separate bonus rate exists.

CPP, the second additional CPP contribution and EI come off the bonus as well, up to the yearly maximums. That timing matters. If your salary has already carried you past the maximum pensionable earnings or the maximum insurable earnings, a bonus paid in November attracts none of those contributions, while the same bonus in February attracts all of them. The tool shows the difference if you change the salary.

None of this is final. Withholding is an estimate the employer makes, and your return settles the real number in the spring. Contributing the bonus to an RRSP before the deadline reduces taxable income for the year, which is the usual reason a bonus produces a refund rather than a balance owing.