A bonus is taxed at your top rate
Because a bonus sits on top of your salary, every dollar is taxed at your marginal rate — not your average rate. That is why bonuses feel heavily taxed. We work it out by comparing your tax with and without the bonus, then adding the extra CPP and EI it triggers.
Routing a bonus into an RRSP can defer the tax to a later year.
Common questions
A bonus stacks on top of your salary, so it is taxed at your marginal rate — your highest bracket. Payroll may also withhold extra upfront, which you reconcile at tax time.
We compare your total tax with and without the bonus, then add the extra CPP and EI on the bonus, to show what you actually keep.
Contributing the bonus to an RRSP can defer the tax, since RRSP contributions reduce your taxable income for the year.