Updated Checked by the Tax-Services.ca editorial team How we check
Federal withholding tax is the federal income tax your employer holds back from each paycheque and sends to the CRA. We assumed that’s what you’re after, since the phrase also covers tax on payments to non-residents, which we cover near the end. On a $60,000 salary in 2026, our engine puts federal tax for the year at $5,338.30, or about $205 on a biweekly cheque.
How does an employer decide what to withhold?
The starting point is your TD1, the personal tax credits return. It tells your employer which credits you claim, and the CRA’s payroll tables turn that into a tax amount for each pay period. You don’t have to file a new TD1 every year. You do need one when you start a job, and the CRA’s page on getting the completed TD1 says the employer needs an updated one within 7 days of a change that would alter your credits.
What if you never hand one in? Then the employer deducts tax after allowing only the basic personal amount. That usually means more tax comes off than needed. The same CRA page says the individual is also liable to a penalty of $25 for each day the form is late, with a $100 minimum and a $2,500 maximum. Hand in the form, and keep it simple: one page, filled in honestly, that changes how much cash you see every two weeks for the whole year. Ten minutes, tops.
Picture Noor, who started a new warehouse job in Brampton and forgot the TD1 for her first month. Her employer took tax using only the basic personal amount, so her first few cheques were smaller than her friend’s on the same wage. She filed the form, and her take-home pay went up from the next pay period.
What are the federal rates for 2026?
Withholding follows the same brackets you use when you file. Each slice of income is taxed at its own rate, so a raise never lowers your take-home pay. It only applies a higher rate to the extra dollars.
| Taxable income | Federal rate |
|---|---|
| Up to $58,523 | 14% |
| $58,523 to $117,045 | 20.5% |
| $117,045 to $181,440 | 26% |
| $181,440 to $258,482 | 29% |
| Over $258,482 | 33% |
What does that look like on real salaries?
We ran four salaries through the payroll deductions calculator engine for Ontario. These are yearly figures after the basic personal amount, the Canada employment amount and the CPP and EI credits.
| Salary | Federal tax for the year | Per biweekly cheque |
|---|---|---|
| $40,000 | $2,691.26 | $103.51 |
| $60,000 | $5,338.30 | $205.32 |
| $90,000 | $11,251.60 | $432.75 |
| $130,000 | $20,102.14 | $773.16 |
The biweekly column is just the yearly figure divided by 26 pay periods. Your pay stub won’t match to the cent. Payroll software works out tax through the year in steps, and CPP and EI stop once you hit their maximums. So the last few cheques of the year can look different. The take-home pay calculator shows the whole picture with provincial tax, CPP and EI added.
Why did my bonus lose so much tax?
Because the tax follows your top bracket. Not your average. A bonus stacks on top of your salary, so the extra dollars are taxed at your highest rate. Try the bonus tax calculator before you plan around a lump sum. The final tax is settled when you file, so an over-withheld amount comes back as a refund.
Big refund every spring? You’ve been lending the government money all year. A new TD1 claiming credits you’re entitled to, such as for a dependant, can fix that. Check what you qualify for with the tax credits calculator, which is federal only.
Is the tax withheld the same as the tax you owe?
Not necessarily. Withholding is an estimate spread over the year. Your actual bill is worked out on your return, after deductions like RRSP contributions and credits the payroll tables never saw. If your employer withheld $9,000 and your return says you owe $8,320.50, you get $679.50 back. If you’ve got a side gig or two jobs, the withholding on each can fall short, and you may owe a few hundred bucks in April.
What if the payment goes to a non-resident?
Different rule, same name. When a Canadian pays a non-resident certain amounts, such as rent, royalties or pensions, the payer must withhold Part XIII tax. The standard rate is 25%. A tax treaty or the Income Tax Act can lower it, and acting services in a film or video production have their own reduced rate of 23%. The payer withholds and sends the money to the CRA. Check the country’s treaty rate on the CRA page before you pay, since treaties get renegotiated.
Non-residents have to pay a 25% tax on amounts that are taxable under Part XIII.
Rates for Part XIII tax, canada.ca
Mistakes and limits
Old TD1s cause trouble. So do credits nobody can support. The engine also has limits: it estimates yearly tax, not the exact payroll table amount, and it doesn’t model every credit. If you run payroll, the payroll remittance calculator estimates the amounts you send in each period, and the CRA’s own tables remain the reference.
How we checked the figures
Brackets, CPP and EI limits are the 2026 figures on CRA pages, held in our data files and checked in late September 2026. The TD1 rules come from the CRA’s page on filing Form TD1. The Part XIII rates come from the CRA’s Part XIII rates page. This site is independent and doesn’t speak for any government.
Frequently asked questions
What is federal withholding tax on a paycheque?
It's the federal income tax an employer holds back from your pay and sends to the CRA. Your TD1 credits set the amount.
Do I need to fill in a TD1 every year?
No. You need one when you start a job and after a change that alters your credits. The employer should have it within 7 days of the change.
What happens if I don't give my employer a TD1?
Tax is deducted after the basic personal amount only. The CRA page also sets a penalty of $25 a day, minimum $100, up to $2,500.
Why doesn't my stub match the calculator?
Payroll software works in steps through the year, and CPP and EI stop at their maximums. Expect small differences.
What is the withholding rate for payments to non-residents?
The standard Part XIII rate is 25%. A treaty or the Income Tax Act can lower it, and acting services in Canada have a 23% rate.
- How Canadian income tax works: brackets and credits
How federal and provincial Canadian income tax stack up, what marginal and average rates mean, and how credits and deductions change your bill