Tax-Aware Income Guide: Salary, Bonus, Equity, and Side Income
This is the hub for earning more without pretending the cheque is the raise. Take-home by province, on a basic-personal-amount worksheet, is salary after tax by province. A bonus that looks over-withheld is bonus tax. A lump sum when the job ends is severance and retiring allowances. A contract that is not a T4 is side-hustle tax, and the status fight underneath it is employee versus contractor. App driving has its own GST rule: rideshare and delivery. A US payer, while you live here, is working remotely for a US company.
- Federal tax in 2026 is 14% up to $58,523, 20.5% to $117,045, 26% to $181,440, 29% to $258,482, and 33% above that. Each rate applies only to its slice.
- The 2026 RRSP dollar limit is $33,810. The eligible part of a pre-1996 retiring allowance can move to your own RRSP without using that room.
- Most small suppliers register for GST/HST after $30,000 of taxable supplies. A self-employed rideshare driver registers from the first fare.
- Employee CPP in 2026 is 5.95% up to the $74,600 ceiling, plus 4% between $74,600 and $85,000. A self-employed person pays both shares.
- A label on a contract does not decide employee versus contractor. CRA looks at control, tools, risk, and the chance of profit.
Which slip does this dollar land on?
Write the legal form before you write the rate. The brackets that turn a salary into tax are federal and provincial. The interactive version of the basic-personal-amount math is the 2026 income tax calculator. It is not a paycheque. CPP, EI, and the Ontario health premium are outside it.
| What you received | Usual slip | What to read next |
|---|---|---|
| Salary or hourly pay | T4. Tax, CPP, and EI are withheld. | Province table and raise math |
| Bonus or irregular amount | T4, in the year you receive it. CPP and EI still apply. | Why the withholding looks high |
| Retiring allowance (severance, some damages, unused sick leave) | Often a T4A. No CPP and no EI on a retiring allowance. | Withholding bands and the pre-1996 RRSP transfer |
| RSUs or employee stock options | Usually employment income, with a separate capital-gain question if you hold the shares after. | Equity compensation |
| Self-employment, freelance, gig | T2125 on the T1. You remit CPP on both shares. GST/HST is a second system. | Side hustles and pricing a consulting rate |
| Salary versus dividends from your corporation | T4, T5, or both. Dividends do not create RRSP room. | Salary versus dividends and when incorporation pays |
Table as of October 2026. It is a map of slips, not a ranking of which form "saves tax."
Why does the same gross pay a different amount in each province?
You pay federal tax wherever you live, and provincial or territorial tax based on where you reside on December 31. Quebec also reduces basic federal tax by the 16.5% abatement in CRA's 2026 payroll formulas, then charges its own tax. A move is a December 31 fact, not the province on the job posting. The housing and tax gap of an actual move is geographic arbitrage. The salary worksheet, with the assumptions written on it, is the province article.
What does a side income do to benefits?
Net self-employment income is income. It can raise the tax bill, create or use RRSP room in a later year, and change income-tested benefits. Clawbacks are not a reason to hide the income. They are a reason to know the stacking before you scale the hustle. The benefit map is side income and clawbacks. Instalments, when last year's tax was high enough that CRA asks for them, are quarterly instalments.
Uber, DoorDash, Etsy, and the rest may withhold their commission. That commission is not Canadian income tax. Part XX of the Income Tax Act requires many platform operators to report seller activity to CRA. You still report the income. The rideshare exception on GST/HST is in the driver article. Ordinary side income uses the $30,000 small-supplier tests.
Where do equity, a holdco, and a career switch sit?
A vesting RSU is usually employment income in the year it lands, even if you cannot sell every share that day. Read the equity guide before you budget the vest. A holding company does not make salary disappear. It changes which taxpayer holds the investment. The structure is holding-company income. A multi-year switch, tuition against lost wages, is career-switch math. None of those pages replace the bracket on this year's T4.
The 2026 RRSP dollar limit is $33,810. Your own room is also capped by a percentage of the prior year's earned income, and by a pension adjustment if a plan exists. Confirm the percentage and the room in your CRA account. The account mechanics are the RRSP playbook and the limits table. A bonus you route into an RRSP only helps if the contribution is deductible. A pre-1996 retiring-allowance transfer is the exception that does not need room. That exception is the severance article, not a trick for a 2026 bonus.
Frequently asked questions
Does a raise get taxed entirely at the next bracket?
No. Canada taxes slices. In 2026, taxable income up to $58,523 is in the 14% federal band. Only the dollars above $58,523, and only up to $117,045, are in the 20.5% band. Your province adds its own slices. The salary article shows the basic-personal-amount result. The calculator is the same method with your number typed in.
Should side income go in a corporation first?
Not because an app paid you. Incorporation has a cost, a separate tax return, and a salary-versus-dividend decision. The existing guides on incorporation and on salary versus dividends are the test. A sole proprietor files a T2125. Start there until the dollars justify a second taxpayer.
Is a bonus taxed at a special high rate?
The paycheque often withholds as if the bonus were stacked on your annual pay. That withholding is not a special bonus tax. When you file, the bonus is employment income in the year you received it. If too much was withheld, the return is where it comes back. The method is the bonus article.
Do I register for GST/HST at the first dollar?
Most businesses do not. The small-supplier threshold is $30,000 of worldwide taxable supplies, in one calendar quarter or across four consecutive calendar quarters, counting associates. Self-employed taxi and commercial rideshare drivers are the clear exception: they register even under that line. Delivery work is not that exception.
What if the payer is in the United States?
Living in Canada and working from Canada usually means Canadian tax on that income, whether the payer is American. The open questions are employee versus contractor, who remits CPP, and whether US tax was also withheld. Those are the remote-work article. Do not assume a US W-2 replaced a Canadian return.
Sources
- CRA: tax rates and income brackets
- CRA: RRSP dollar limit, YMPE, and YAMPE
- CRA: when to register for GST/HST
- CRA: T4127 payroll formulas, 122nd edition, January 2026
The slip decides the plan.
Brackets, credits, and the order of RRSP, TFSA, and FHSA room are the other half of a raise. The 2026 tax guide is that half.
Get the 2026 Tax Guide — $49 CAD
