Raise and Promotion Math for Canadians: When Staying Beats a Move
This page is the comparison. Equity that vests later is the RSU and stock-option guide. If the offer is in another province, the tax and housing gap is geographic arbitrage inside Canada. Where the extra dollars go once they land is the cash-flow system and the saving-rate target. The brackets that turn gross into net are federal and provincial. Confirm the year's tables. Do not negotiate off a screenshot from last spring.
New RRSP room is a percentage of the prior year's earned income, up to a dollar maximum, minus a pension adjustment if a plan exists. A raise you receive this year shows up as room next year. Dividends and most investment income do not create that room. TFSA room is a statutory amount. It does not grow because your salary did. Confirm both ceilings in your CRA account. The mechanics are the RRSP playbook, the limits guide, and the three-account comparison.
Write the package in one column
Compare stay and go on the same lines. If a line exists on only one side, it is still a line. Zero is a number.
| Piece | How to price it | What gets skipped |
|---|---|---|
| Base salary | The incremental dollars, taxed at your marginal federal-plus-provincial rate, not at your average rate. Once employment income is already above the year's pensionable-earnings ceiling, extra salary does not attract more CPP. Confirm the ceiling. | Quoting the gross gap as if it arrives in the bank account. |
| Bonus | A probability, not the target. A plan that paid half the target for three years is a half-target plan until the letter says otherwise. | Treating an on-target bonus as salary you have already earned. |
| Equity you would forfeit | Unvested RSUs and options have an expected value and a tax character. Price the after-tax amount you give up by leaving, using the equity tax guide. A new grant replaces that value only on its own vest schedule. | Counting the new grant's face value and ignoring the old grant's remaining vest. |
| Pension or match | Employer contributions, plus service you would restart. A defined-benefit pension adjustment can consume the RRSP room the raise would have created. The pension can still be the larger asset. The plan types are defined benefit versus defined contribution. | Valuing a match at zero because it is "not cash," or valuing a pension at the room it uses up. |
| Health and disability | The premium you would pay to replace the coverage, including the waiting period at the new employer. Salary-based disability often rises with the raise, up to a cap in the contract. The contract is the disability guide. | Assuming the new plan starts on day one, or that a raise automatically lifts a capped benefit. |
| Time | Vacation days, a commuting change, and unpaid overtime you can already see from the job description. | A title that does not change the next negotiation. |
When the raise wins
Staying wins when the after-tax increase you can actually get, plus the after-tax value of what you would forfeit, beats the new offer. Forfeiture is the part people leave off the spreadsheet because it is not on the new letter. Unvested equity, pension service, a benefits waiting period, accrued vacation, and a probation period are all prices. A voluntary resignation can also affect employment insurance if the new job fails quickly. The qualifying rules are the EI guide. Confirm them with Service Canada before you treat a hop as reversible.
A one-time retention cheque does not compound and does not build next year's RRSP room. A base increase does both. If the employer offers a bonus instead of salary, convert it to the salary that would leave you even after tax, then say which one you are accepting. Employee deductions that already come off the cheque — union dues, professional fees, a required home office — stay in the picture either way. The list is employee deductions.
When the move wins
Leaving wins when the new package, after tax and after the benefits you must replace yourself, still exceeds the stay case by enough to cover forfeiture, a move, and the months you are uninsured or under-insured. Scope matters when you can name the job it qualifies you for next. A title with the same work and a new email signature is not that. If the new city changes provincial tax or housing, run that math before you add the salary gap. It is a different article on purpose.
Some employers match and then plan around you. You cannot see that on the letter. What you can see is whether the match changes base, vest, and the job, or whether it is a single cheque to keep this quarter's headcount. Take the structural change. Treat the cheque as income in one year.
An illustration, not your offer
Current base $110,000. An outside offer of $125,000. Suppose, for this illustration only, that incremental employment income is taxed at a combined 43 percent. The $15,000 gross gap is about $8,550 after that supposed tax. CPP is assumed to be already at the ceiling, so it does not change the gap. Confirm your ceiling and your actual marginal rate. This 43 percent is not a bracket.
Leaving forfeits unvested equity with an illustrative pre-tax value of $18,000. If that equity would have been employment income, the same supposed 43 percent leaves about $10,300 after tax. The current plan also matches 4 percent of base, $4,400 a year, into a retirement account. The new plan matches nothing and delays health coverage for three months. The hop's after-tax cash edge, about $8,550, does not cover the forfeited equity, the match, and three months of benefits you would buy yourself.
A stay increase of $8,000 of base, same supposed 43 percent, is about $4,560 after tax, and it keeps the equity and the match. In this illustration the smaller raise wins. Change the forfeiture, the match, or the rate, and the winner changes. That is the point of writing the column.
Key takeaways
- Negotiate the column, not the base. Bonus probability, unvested equity, pension service, and benefits are part of the price.
- Tax the increment at the marginal rate. Confirm federal and provincial tables, and whether you are already above the CPP ceiling.
- A raise this year is RRSP room next year. It does not create TFSA room. A pension adjustment can absorb the new room.
- Price what you forfeit. A hop that looks larger on base can be smaller once unvested value and a benefits gap are in the same units.
- Prefer a base change to a one-time cheque when the employer will do either. The cheque does not compound and does not build next year's room.
Related reading
- RSUs and employee stock options — how forfeited and newly granted equity is taxed.
- Defined benefit versus defined contribution — the pension you restart if you leave.
- Disability insurance — the benefit a raise may or may not lift.
- RRSP playbook — room, the pension adjustment, and the deduction.
- Geographic arbitrage — when the offer is in another province.
The raise is only worth what the return leaves you.
Marginal rates, RRSP room, and the pension adjustment are tax. The 2026 tax guide is that half of the negotiation.
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