Commission Tax Calculator (2026)

Your employer is working from a decision tree

Commission gets its own line on your T4 — box 42 — but that's a reporting label, not a rate; the brackets that catch it are the ones behind your regular take-home pay. What makes the deductions unpredictable is that CRA gives your employer three separate withholding routes, and which one you land on turns on paperwork and timing rather than the size of the cheque.

• Commission on a set schedule, no expense claim. CRA's instruction is to add it to your basic pay and withhold as though the whole thing were salary.
• Commission that arrives irregularly, or in amounts that swing. The employer is pointed at the bonus or irregular-payments method — CRA's example is a salesperson paid twice one month and not at all the next.
• You filed Form TD1X. A different formula takes over, built on your estimate of the whole year rather than on whatever arrived this period.

The first two set your rate from one pay period. The third looks at the year, and it's the one you have to ask for. All three assume a T4 employee — commission earned as a contractor runs through the self-employed tax calculator.

The form that prices the year, not the month

TD1X is the Statement of Commission Income and Expenses for Payroll Tax Deductions. You give payroll two numbers: what you expect to bring in this year, and what you expect to spend earning it. Your employer takes the annual tax on the net of those and holds back each payment's proportional slice — CRA's formula divides that annual tax by how many times your estimated yearly total divides into the cheque in hand. Withholding stops reacting to individual months: a dead February and a quarter that closed three deals give up the same share.

The form sets its own deadlines: January 31 with the same employer as last year, otherwise within a month of starting a new job, of a change to your TD1 credits, or of your estimated income or expenses shifting sharply. If you were on commission last year, last year's actual figures will do. Cancel it any time in writing and withholding reverts to your TD1 claim amount. Being a CRA form, it does nothing in Quebec — Revenu Québec runs its own paperwork.

The expense line is the half that changes the total

Everything above is timing. The expense box isn't — commission employees can deduct what it costs them to earn the commission, and that comes off the year's tax for good. Two forms gate it: your employer signs T2200, certifying the job required you to cover those costs, and you claim on T777, with Guide T4044 setting out what qualifies. TD1X replaces neither; it just lands the deduction in your withholding from January instead of as a refund the following spring.

The estimate is yours, and it cuts both ways: claim expenses you don't incur, or out-earn your projection, and too little was held back — a balance owing in April.

What CPP does to an uneven month

CPP tightens it further, in a way peculiar to commission: on irregular payments CRA has the employer prorate the $3,500 basic exemption by the days since your last commission payment, so two payments close together leave the second with a sliver of exemption and 5.95% on nearly the whole amount. EI is the quiet part — "the same manner as you would for regular salary," 1.63% to $68,900.

One cheque, two versions of the year

With no TD1X on file, the rate for each payment is set from that payment alone — and unlike a one-off bonus, that happens again every time you're paid. A rep on a $55,000 Ontario base closes a strong March and earns $12,000 in commission. Payroll adds that to the $4,583 of base and multiplies by twelve:

Withholding follows the left column: income tax on that March pay is about $5,206, roughly $4,608 of it down to the commission — 38.4%. With a TD1X estimating $75,000 it would have been about $2,809: same pay, same employer, some $2,400 less held back, because payroll was pricing the year instead of the month.

Over twelve months that rep earns $20,000 of commission costing $5,527 in income tax — 27.6%, not 38.4%. With $1,182 of CPP and $227 of EI, it gives up $6,935 and leaves $13,065. March's excess isn't gone; you're lending it to CRA until you file.