Bonus Tax Calculator Ontario 2019

Use this Ontario bonus tax calculator to determine how much tax you owe on your 2019 bonus. Bonuses are taxed differently than regular income in Ontario, and understanding the calculation can help you plan your finances effectively.

How Bonus Tax Works in Ontario

In Ontario, bonuses are subject to a special tax calculation that differs from regular income tax. The Ontario government treats bonuses as a separate source of income that's taxed at a flat rate, regardless of your overall income level.

This system was introduced to ensure that employees receive a portion of their bonus tax-free, while still generating revenue for the province. The calculation involves determining your bonus tax rate based on your total income for the year.

Note: The bonus tax rules in Ontario changed in 2020. This calculator uses the 2019 rules which applied to bonuses paid in 2019.

How to Calculate Bonus Tax

The calculation involves several steps to determine your bonus tax rate and then applying that rate to your bonus amount. Here's the basic process:

Calculate your total income for the year (including your bonus)
Determine your bonus tax rate based on your total income
Calculate your tax-free portion of the bonus
Calculate the taxable portion of the bonus
Calculate the tax owed on the taxable portion

Bonus Tax Rate = { if (Total Income ≤ $50,000) 0% else if (Total Income ≤ $100,000) 10% else if (Total Income ≤ $150,000) 15% else 20% }

Once you have your bonus tax rate, you can calculate the taxable portion of your bonus and the tax owed.

Example Calculation

Let's walk through an example to illustrate how the bonus tax calculation works. Suppose you earned a $10,000 bonus in 2019 and your total income for the year was $80,000.

Total Income = $80,000
Bonus Tax Rate = 15% (since $80,000 is between $50,000 and $100,000)
Tax-Free Portion = $5,000 (fixed amount)
Taxable Portion = $10,000 - $5,000 = $5,000
Tax Owed = $5,000 × 15% = $750

In this example, you would owe $750 in bonus tax on your $10,000 bonus.

Ontario Tax Rates for Bonuses

The bonus tax rate in Ontario depends on your total income for the year. Here are the current 2019 rates:

Total Income	Bonus Tax Rate
Up to $50,000	0%
$50,001 to $100,000	10%
$100,001 to $150,000	15%
Over $150,000	20%

Note that the tax-free portion of your bonus is $5,000 regardless of your income level. Only the amount above $5,000 is subject to the bonus tax rate.

Frequently Asked Questions

How is bonus tax different from regular income tax?: Bonus tax is calculated separately from regular income tax and uses a flat rate based on your total income for the year. Regular income tax is progressive and based on your overall income.
Is the bonus tax rate the same for everyone?: No, the bonus tax rate varies based on your total income for the year. Higher income earners pay a higher bonus tax rate.
Do I need to pay bonus tax if I'm in a high tax bracket?: Yes, even if you're in a high tax bracket, you'll still pay bonus tax on the portion of your bonus that exceeds $5,000. The tax rate increases with your total income.
Can I deduct bonus tax from my income?: No, bonus tax is not deductible from your income. It's an additional amount you owe to the government on top of your regular income tax.
Are there any exemptions for bonus tax?: The only exemption is the $5,000 tax-free portion of your bonus. The remaining amount is subject to the bonus tax rate based on your total income.