Bonus Tax in Canada
A bonus is taxed like salary. How payroll withholds on bonuses, a worked example, and how an RRSP transfer or timing keeps more.
The short version
- A bonus is taxed exactly like salary: at your marginal rate. There's no special "bonus tax."
- What feels like a bonus tax is withholding. Employers usually withhold the tax on your yearly pay plus the bonus, minus the tax on yearly pay alone, which lands close to your real marginal rate.
- Example, Ontario: a $10,000 bonus on an $80,000 salary costs about $2,906 of income tax and $200 of CPP2. You keep about $6,894.
- CPP and EI are deducted from a bonus too, until you reach the yearly maximums.
- Have RRSP room? Your employer can put the bonus straight into your RRSP with no tax withheld.
Bonus Tax in Canada
Everyone has a friend who swears their bonus was "taxed at 50%." Usually the friend is looking at a pay stub where the bonus landed in the same pay as regular salary and some taxable benefit, and the payroll system panicked. The bonus itself is just more income, taxed like the last dollars of your salary. Here's how much really goes, why the pay stub looks worse, and two ways to keep more.
How Much of a Bonus You Keep
| Salary (Ontario) | Bonus | Income tax | CPP/CPP2/EI | You keep |
|---|---|---|---|---|
| $80,000 | $10,000 | about $2,906 | $200 | about $6,894 |
From our 2026 rules engine, rounded. At $80,000 base CPP and EI are already maxed, so only CPP2 applies; at lower salaries more CPP and EI come off the bonus. Try your own salary with and without the bonus in the income tax calculator, and see your rate on marginal tax rates.
What will your bonus really net?
Tell the assistant your salary, the bonus, your province and your RRSP room. It shows the tax, what payroll will withhold, and how much an RRSP transfer saves.
Why the Pay Stub Looks Worse
- Bonus added to a regular pay without the bonus method: payroll annualizes the whole cheque, so the tax looks much higher. It's corrected on your return.
- Taxable benefits landing in the same pay add tax without adding cash.
- CPP2 starts once earnings pass $74,600, so a bonus can trigger a deduction you haven't seen before; see CPP and EI deductions.
- Ontario Health Premium steps up with income and is collected with income tax.
If too much was withheld, the extra comes back as a refund; the tax refund estimator shows how much. Why paycheques vary in general: paycheque deductions.
Ways to Keep More of a Bonus
- Direct RRSP transfer: ask payroll to send all or part of the bonus to your RRSP (often a group RRSP). If you have room, no tax is withheld on that part and you deduct it on your return. See RRSP and the RRSP tax savings calculator.
- Timing: a bonus paid in January instead of December falls into next year's income. Useful if this year's income is unusually high, or next year's will be lower (parental leave, retirement). Employers have rules about this; ask.
- Benefits and credits: a bonus raises family net income, which can reduce next July's child benefit. An RRSP transfer avoids that too.
Bonus Tax Questions
How much tax is taken off a bonus in Canada?
Payroll usually withholds the difference between the tax on your yearly pay plus the bonus and the tax on your yearly pay alone, close to your marginal rate. Your actual tax is the same as on any other employment income.
Is a bonus taxed more than regular pay?
No. A bonus is employment income, taxed at your marginal rate. It can look higher on a pay stub because of how withholding is calculated.
Can I put my bonus into my RRSP to avoid tax?
Yes. If your employer transfers it directly to your RRSP and you have contribution room, no tax is withheld on that amount, and you deduct the contribution on your return.
Is CPP and EI deducted from a bonus?
Yes, until you reach the yearly maximums. Bonuses can also trigger CPP2 on earnings above $74,600 in 2026.
Will I get some of my bonus tax back?
If more was withheld than your actual tax, the difference is refunded when you file your return.
Sources: CRA, T4127 Payroll Deductions Formulas, January 2026. Checked October 2026. Withholding methods vary by payroll system; the bonus method described is CRA's formula for bonuses and retroactive pay. Direct RRSP transfers without withholding depend on the employer having reasonable grounds that you can deduct the contribution.
Last reviewed October 5, 2026 against CRA and Government of Canada sources. How we check our facts.