How Are Bonuses Taxed in Canada?

Are bonuses taxed differently than salaries in Canada?

No. Taxes are calculated for your both regular salary and bonuses in the same way. Your bonus is taxed according to the same federal and provincial/territorial tax rates that the rest of your income is taxed. However, it might seem like you’re getting taxed more on that extra money because more of your earnings may end up in a higher tax bracket.

As you may already know, Canada has a marginal tax system, which means different income levels are taxed at different rates. Adding a bonus on top of your salary could mean that a portion of your income is bumped into a higher tax bracket. And then you end up paying a higher tax rate for that portion of income, which includes your bonus. (Curious about what the tax rates are? You’ll find them at the end of this article.) 

How bonuses are taxed in Canada?

Bonuses are considered “supplemental income,” which simply means money you earn over and above your regular paycheque. In Canada, this supplemental income is subject to income tax, just like your regular salary. In other words, your regular salary and your bonus are subject to the exact same amount and type of tax.

Also, just like your salary, your bonus will include deductions like the Canada Pension Plan (CPP) and Employment Insurance (EI). (The only exception is if you’ve already made the maximum contributions for the year.)

How much tax is deducted from a bonus in Canada?

Let’s use an example to calculate the tax owed on a bonus. Ravi lives in Ontario and makes $100,000 a year in his tech job. His company awarded him a bonus of $8,000 at the end of the fiscal year. Here’s how we could calculate the tax on a bonus in Ontario:

First, use TurboTax’s handy Income Tax Calculator and select Ontario to see what Ravi would owe for his regular salary. For 2024, he would owe an estimated $21,590 in taxes. (That’s $14,362 in federal tax + $7,228 in provincial tax.)

Then, add the $8,000 bonus to his $100,000 salary to get $108,000. The estimated tax owed on this amount is $24,472. (That’s $16,038 in federal tax + $8,435 in provincial tax.)

To find out how much Ravi would owe on the $8,000 bonus alone, subtract the two totals ($24,472 – $21,590 = $2,882). Therefore, Ravi would pay $2,882 on his $8,000 bonus.

How to report a bonus on your tax return

Now, here’s the easy part. To report a bonus on your tax return, simply include where you report employment income, aka line 10100 of your tax return. This is where you’ll report everything from salary, wages, and commissions to bonuses, tips/gratuities, and honoraria. Your bonus will also appear in Box 14 (employment income) on your T4 slip (and often in Box 40—other taxable allowances and benefits—as well).

Bonus tax and RRSPs

Some people like to deposit their bonus directly into an RRSP. If your employer does this, then there’s no tax withholding. And the benefit is that you don’t have to wait for a tax refund to start investing the amount.

However, your contribution room for the year remains the same, and the bonus counts toward the year it was awarded. 

What are the federal and provincial bonus tax rates?

To help you determine your taxes owing, here are your marginal federal and provincial/territorial tax rates!

2024 federal income tax rates 

These rates apply to everyone who earns income in Canada.

• 15% on taxable income that is $55,867 or less
• 20.5% on taxable income from $55,867 to $111,733
• 26% on taxable income from $111,733 to $173,205
• 29% on taxable income from $173,205 to $246,752
• 33% on taxable income over $246,752

2024 provincial and territorial income tax rates

The following tax rates depend on where in Canada you live.

Newfoundland and Labrador 

• 8.7% on taxable income that is $43,198 or less
• 14.5% on taxable income from $43,198 to $86,395
• 15.8% on taxable income from $86,395 to $154,244
• 17.8% on taxable income from $154,244 to $215,943
• 19.8% on taxable income from $215,943 to $275,870
• 20.8% on taxable income from $275,870 to $551,739
• 21.3% on taxable income from $551,739 to $1,103,478
• 21.8% on taxable income from $1,103,478

Prince Edward Island

• 9.65% on taxable income that is $32,656 or less
• 13.63% on taxable income from $32,656 to $64,313
• 16.65% on taxable income from $64,313 to $105,000
• 18.00% on taxable income from $105,000 to $140,000
• 18.75% on taxable income over $140,000

Nova Scotia

• 8.79% on the portion of taxable income that is $29,590 or less
• 14.95% on taxable income from $29,590 to $59,180
• 16.67% on taxable income from $59,180 to $93,000
• 17.5% on taxable income from $93,000 to $150,000
• 21% on taxable income over $150,000

New Brunswick

• 9.4% on taxable income that is $49,958 or less
• 14% on taxable income from $49,958 to $99,916
• 16% on taxable income from $99,916 to $185,064
• 19.5% on taxable income over $185,064

Quebec

• 14% on taxable income that is $51,780 or less
• 19% on taxable income from $51,780 to $103,545
• 24% on taxable income from $103,545 to $126,000
• 25.75% on taxable income over $126,000

Ontario 

• 5.05% on taxable income that is $51,446 or less,
• 9.15% on taxable income from $51,446 to $102,894
• 11.16% on taxable income from $102,894 to $150,000
• 12.16% on taxable income from $150,000 to $220,000
• 13.16% on taxable income over $220,000

Manitoba 

• 10.8% on taxable income that is $47,000 or less
• 12.75% on taxable income from $47,000 to $100,000
• 17.4% on taxable income over $100,000

Saskatchewan

• 10.5% on taxable income that is $52,057 or less
• 12.5% on taxable income from $52,057 to $148,734
• 14.5% on taxable income from $148,734

Alberta 

• 10% on taxable income that is $148,269 or less, plus
• 12% on taxable income from $148,269 to $177,922
• 13% on taxable income from $177,922 to $237,230
• 14% on taxable income from $237,230 to $355,845
• 15% on taxable income from $355,845

British Columbia 

• 5.06% on taxable income that is $47,937 or less
• 7.7% on taxable income from $47,937 to $95,875
• 10.5% on taxable income from $95,875 to $110,076
• 12.29% on taxable income from $110,076 to $133,664
• 14.7% on taxable income from $133,664 to $181,232
• 16.8% on taxable income from $181,232 to $252,752
• 20.5% on taxable income from $252,752

Yukon 

• 6.4% on taxable income that is $55,867 or less
• 9% on taxable income from $55,867 to $111,733, 
• 10.9% on taxable income from $111,733 to $173,205
• 12.8% on taxable income from $173,205 to $500,000
• 15% on the taxable income over $500,000

Northwest Territories

• 5.9% on taxable income that is $50,597 or less
• 8.6% on taxable income from $50,597 to $101,198
• 12.2% on taxable income from $101,198 to $164,525
• 14.05% on taxable income over $164,525

Nunavut 

• 4% on taxable income that is $53,268 or less
• 7% on taxable income from $53,268 to $106,537
• 9% on taxable income from $106,537 to $173,205
• 11.5% on taxable income from $173,205

Make sure you understand what you owe for bonus tax in Canada

Getting a bonus for your hard work is definitely exciting. But to avoid being surprised by the taxes you’ll owe, make sure that you understand how bonuses are taxed and are familiar with your marginal tax rates. If you still have questions, the experts at TurboTax can help you with bonus tax calculations in Canada.