Bonus Tax Calculator Ontario 2018

How to Calculate Bonus Tax in Ontario 2018

In Ontario, bonuses are taxed differently than regular income. The tax rate applied to bonuses depends on your total taxable income for the year. Here's how to calculate your bonus tax for 2018:

Step 1: Determine Your Bonus Amount

First, identify the total amount of your bonus payment. This is the gross amount before any deductions.

Step 2: Calculate Your Total Taxable Income

Add your bonus amount to your total taxable income for the year. This includes your regular salary, other income, and any other taxable benefits.

Step 3: Apply the Ontario Tax Brackets

Ontario uses progressive tax rates. The tax rate applied to your bonus depends on where your total taxable income falls in the tax brackets:

• 5.05% on the first $44,703 of taxable income
• 9.15% on the next $44,703 ($44,704 to $89,406)
• 11.16% on the next $55,266 ($89,407 to $144,673)
• 12.16% on the next $66,291 ($144,674 to $210,965)
• 13.16% on amounts over $210,965

Step 4: Calculate the Bonus Tax

The tax on your bonus is calculated based on the marginal tax rate that applies to your total taxable income. This means the tax rate applied to your bonus is the same as the rate that would apply to the last dollar of your total taxable income.

Step 5: Subtract the Basic Personal Amount

If your total taxable income is less than $44,703, you can subtract the basic personal amount of $11,701 from your tax calculation.

Worked Example

Let's calculate the bonus tax for a scenario where:

• Bonus amount: $10,000
• Total taxable income before bonus: $80,000

Step 1: Calculate Total Taxable Income

$80,000 (existing income) + $10,000 (bonus) = $90,000 total taxable income

Step 2: Determine Marginal Tax Rate

$90,000 falls in the 9.15% tax bracket ($44,704 to $89,406).

Step 3: Calculate Bonus Tax

$10,000 × 9.15% = $915

Final Result

The estimated tax on your $10,000 bonus would be $915.