Question 1

How much of my raise do I actually keep?

Accepted Answer

In Canada, the amount you keep depends on your marginal tax rate plus CPP and EI contributions. For example, if your combined federal-provincial marginal rate is 29.65% (the common bracket for income between $57,375 and $111,733), you keep roughly 60-65 cents of each new dollar after all deductions. Higher earners in the top brackets may keep as little as 40-46 cents.

Question 2

Why is my raise taxed more than my regular salary?

Accepted Answer

Your raise is not taxed at a higher rate than the rest of your income — but each additional dollar is taxed at your marginal rate, which is the rate on the last dollar earned. Your overall (effective) tax rate averages all brackets together. A $5,000 raise taxed at your marginal rate appears higher than your effective rate, but it is the normal way Canada progressive tax system works.

Question 3

How do CPP and EI affect my raise?

Accepted Answer

CPP contributions are 5.95% (employee portion) on earnings between $3,500 and $71,300, plus a second ceiling (CPP2) of 4% on earnings between $71,300 and $81,200. EI premiums are 1.64% on earnings up to $65,700. If your salary is already above these ceilings, a raise will not trigger additional CPP or EI — making more of it take-home pay.

Question 4

What is the marginal tax rate on a raise?

Accepted Answer

Your marginal rate is the combined federal and provincial rate on your highest dollar of income. In 2026, federal brackets range from 15% (under $57,375) to 33% (over $253,414). Provincial rates add 4-25% on top. Most middle-income Canadians face a combined marginal rate of 29-38%.

Question 5

Is a percentage raise or flat raise better?

Accepted Answer

A percentage raise grows with your salary — a 5% raise on $80,000 is $4,000, and it compounds each year. A flat raise (e.g. $4,000) stays the same regardless of future increases. Over time, percentage raises are more valuable because future percentage increases stack on the higher base.

Question 6

How do I negotiate a raise in Canada?

Accepted Answer

Research market rates using tools like the Robert Half Salary Guide, Glassdoor, or Statistics Canada wage data. Time your request after a strong performance review or project completion. Present concrete accomplishments with metrics. Have a specific number in mind (typically 3-5% for cost-of-living, 10-20% for a promotion). Be prepared to discuss if the employer cannot match — consider extra vacation, flexible work, or professional development.

Question 7

Should I ask for a raise or more vacation time?

Accepted Answer

From a purely financial perspective, a raise compounds over time and increases future raises, bonuses, and pension contributions. However, an extra week of vacation has a real value of roughly 2% of salary (1/50 weeks). If you are in a high tax bracket, an extra week of vacation (untaxed time) may be worth more than a small raise after taxes.

Question 8

How much should my raise be to keep up with inflation?

Accepted Answer

To maintain purchasing power, your raise should at least match the Consumer Price Index (CPI) increase. In Canada, CPI averaged 2.7% in 2024. A cost-of-living raise below CPI is effectively a pay cut in real terms. Merit increases typically range from 3-5%, meaning only the portion above inflation represents a real gain.

Taxable Income	Federal Rate
Up to $57,375	15%
$57,375 – $114,750	20.5%
$114,750 – $158,468	26%
$158,468 – $220,000	29%
Over $220,000	33%

Component	Amount
Gross raise	$5,000
Federal tax (20.5%)	-$1,025
Ontario tax (9.15%)	-$458
CPP (5.95%)	-$298
EI (1.64%)	-$82
Net raise	$3,137
Keep rate	62.7%

Deduction	2026 Ceiling	Rate	Max Annual
CPP (first ceiling)	$71,300	5.95%	$4,034
CPP2 (second ceiling)	$81,200	4.00%	$396
EI	$65,700	1.64%	$1,077

Current Salary	5% Raise	Marginal Rate (ON)	Net Extra/Year	Net Extra/Month
$45,000	$2,250	29.65%	$1,434	$120
$65,000	$3,250	29.65%	$2,071	$173
$85,000	$4,250	31.48%	$2,810	$234
$110,000	$5,500	33.89%	$3,543	$295
$150,000	$7,500	43.41%	$4,244	$354

Raise Calculator

How this raise calculator works

Understanding the tax impact of a raise

2026 Federal marginal rates

Example: $5,000 raise at $75,000 salary (Ontario)

CPP and EI ceilings matter

Raise scenarios across income levels

What to do with your raise