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 2025, he would owe an estimated $20,469 in taxes. (That’s $13,642 in federal tax + $6,827 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 $23,016. (That’s $15,282 in federal tax + $7,733 in provincial tax.)

To find out how much Ravi would owe on the $8,000 bonus alone, subtract the two totals ($23,016 – $20,469 = $2,547). Therefore, Ravi would pay $2,547 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!

2025 federal income tax rates

These rates apply to everyone who earns income in Canada.

2025 provincial and territorial income tax rates

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

Newfoundland and Labrador 

Prince Edward Island

Nova Scotia

New Brunswick

Quebec

Ontario 

Manitoba 

Saskatchewan

Alberta 

British Columbia 

Yukon 

Northwest Territories

Nunavut 

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.