Understanding take-home pay
Gross vs net salary: what is take-home pay?
Understand the difference between your salary, your take-home estimate and the cash left after saving.
Understanding take-home pay
Marginal vs average tax: what happens to a raise?
Understand why the rate on an extra portion of salary differs from the rate on your overall income.
Canada · Ontario fictional example; payroll rules vary · 2026
A higher bracket applies to a portion of income
Progressive tax brackets divide taxable income into portions. Moving into another bracket does not mean the new rate applies to every dollar you earned. Tax credits, contributions and other modeled rules also affect the result.
References: CRA · Progressive tax rates and income brackets · CRA · 2026 income tax rates
Average income tax and take-home keep rate differ
Average income tax compares total modeled income tax with the relevant income amount. Take-home keep rate also reflects supported employee deductions and contributions. Compare like definitions rather than treating the two percentages as interchangeable.
References: FCAC · Understanding your pay and deductions · CRA · Progressive tax rates and income brackets
Compare complete scenarios for a raise
Our fictional Ontario baseline and extra-CA$1,000 scenarios are computed through the same engine. The change in take-home reflects the combined modeled deductions on that extra income, not just one tax-bracket percentage.
CA$643.21 more take-home
| Annual change | Amount |
|---|---|
| Gross increase | CA$1,000.00 |
| Additional take-home | CA$643.21 |
| Additional tax and payroll deductions | CA$356.79 |
| Share of this increment retained | 64.3% |
Fictional full-year resident employee, basic claims, ordinary CPP/EI treatment. No other income or deductions. RRSP and TFSA are zero except in their named cases. Display amounts rounded to cents; rates to one decimal. Engine verification: 9 October 2026.
References: CRA · January 2026 payroll formulas · CRA · Progressive tax rates and income brackets
Sources and verification
Official references checked 2026-10-13. Examples reproduced with the existing TaxCalcy engine; no qualified human tax review is recorded.
- FCAC · Understanding your pay and deductionsGross/net definitions and common pay-stub deductions
- CRA · January 2026 payroll formulasEmployee contributions, basic credits and Ontario adjustments; annualized model reference
- CRA · Progressive tax rates and income bracketsOnly each portion of taxable income is taxed at its applicable bracket rate
- CRA · 2026 income tax rates2026 federal and Ontario bracket schedules
Example inputs and model record
Canada · Ontario · 2026 · annual salary · full-year resident employee · basic claims. Other income, household entries, FHSA and other deductions are zero. Hours/week: 40; weeks/year: 52. No professional review is claimed.
baseline
Salary CAD 60,000.00. RRSP CA$0.00; entered RRSP room CA$0.00; TFSA CA$0.00.
Recorded annual output: income tax CAD 8,320.50; employee payroll CAD 4,339.75; take-home CAD 47,339.75.
Model: ca-2026-2105625dff9c · release taxcalcy-candidate-2026-09-27.10 · schema 1 · approval NEEDS_REVIEW
Reproduced 2026-10-09; amounts to cents, rates to one decimal. Recorded inputs and outputs are retained in the repository.
extra1000
Salary CAD 61,000.00. RRSP CA$0.00; entered RRSP room CA$0.00; TFSA CA$0.00.
Recorded annual output: income tax CAD 8,601.49; employee payroll CAD 4,415.55; take-home CAD 47,982.96.
Model: ca-2026-2105625dff9c · release taxcalcy-candidate-2026-09-27.10 · schema 1 · approval NEEDS_REVIEW
Reproduced 2026-10-09; amounts to cents, rates to one decimal. Recorded inputs and outputs are retained in the repository.
Found something that needs correcting? Contact TaxCalcy with the guide title and the issue.
← Return to Guides