Salary vs dividend calculator 2026
For a BC company with $200,000 of profit whose owner wants $80,000 in hand in 2026, all dividends cost about $31,980 in corporate and personal tax with no CPP. All salary costs $30,578 in tax plus $9,293 of CPP, but builds $18,958 of RRSP room. Most business owners take some of each.
2026 rates, checked 21 Oct 2026Simplified estimateSummary free, no sign-up
Your mix, 2026
$31,159
To put $80,000 in your pocket, the company pays you $48,756 of salary and $48,756 of dividends. That costs $31,159 in tax plus $5,385 of CPP, and leaves $83,455 in the company.
| Salary | $48,756 |
| Dividends (non-eligible) | $48,756 |
| Corporate tax | $16,341 |
| Personal income tax | $14,819 |
| CPPyou and the company | $5,385 |
| Total tax and CPP | $36,545 |
For the same cash, all salary costs $30,578 in tax plus $9,293 of CPP; all dividends cost $31,980 in tax and no CPP.
RRSP room: 18% of 2026 salary, which becomes 2027 room, up to the 2027 limit of $35,390. No EI: business owners with more than 40% of the voting shares generally can't pay into EI.
Simplified estimate only: general information, not tax advice.
Compare all three, line by lineAll salary, all dividends and your mix, why they differ, RRSP room, CPP and next steps Book a free 15-minute callSimplified estimate only, general information, not tax advice. Your situation may differ; book a free 15-minute call before acting. It ignores the BC employer health tax, WorkSafeBC and Alberta WCB premiums, the passive income rules, refundable taxes, eligible dividend pools (GRIP), associated companies, income splitting rules, minimum tax and other personal credits.
Salary, dividends or your mix, side by side
The three ways to take the same cash, with corporate and personal tax, CPP, RRSP room and what stays in the company, then your mix line by line with the reason for each figure. It follows every change you make above.
| Item | All salary | All dividends | Your mix50% salary |
|---|---|---|---|
| Salary | $105,321 | $0 | $48,756 |
| Dividends | $0 | $89,980 | $48,756 |
| Corporate tax | $9,904 | $22,000 | $16,341 |
| Personal income tax | $20,675 | $9,980 | $14,819 |
| Total tax | $30,578 | $31,980 | $31,159 |
| CPP (you and the company) | $9,293 | $0 | $5,385 |
| Total tax and CPP | $39,871 | $31,980 | $36,545 |
| Cash in hand | $80,000 | $80,000 | $80,000 |
| Left in the company | $80,129 | $88,020 | $83,455 |
| RRSP room created | $18,958 | $0 | $8,776 |
CPP is not a tax: it buys a CPP retirement pension. Money left in the company is taxed again when you take it out.
Why the totals differ
Your mix, line by line
| Line | Amount |
|---|
RRSP room and CPP
Planning notes
What to do next
$80,000 in hand from a $200,000 BC company
A BC owner-manager's company earns $200,000 before paying the owner, who wants $80,000 after personal tax and CPP in 2026. The example assumes the corporation and its income qualify for the small business deduction, so corporate tax is 11%.
- All salary: the company pays $105,321 of salary and $4,646 of employer CPP. Both are deductible, so corporate tax on the remaining $90,033 is $9,904 (11%). The owner pays $20,675 of income tax and $4,646 of CPP and keeps $80,000. Total tax $30,578, CPP $9,293, and $18,958 of RRSP room for 2027.
- All dividends: the company pays $22,000 of corporate tax (11% of $200,000), then $89,980 of non-eligible dividends. The owner pays $9,980 of personal tax and no CPP. Total tax $31,980, no CPP and no RRSP room.
- Half and half: $48,756 of salary and $48,756 of dividends. Total tax $31,159, CPP $5,385, RRSP room $8,776.
All salary leaves the least in the company ($80,129) because of the employer CPP; all dividends leaves the most ($88,020). That money still faces personal tax when it comes out later.
Salary
Deducted by the company. Builds RRSP room (18% of salary) and a CPP pension. You and the company both pay CPP. Needs a payroll account, remittances and a T4.
Dividends
Paid from profit after corporate tax. No CPP and no payroll. Creates no RRSP room and no CPP pension. Needs a resolution and a T5 slip.
A mix
Most business owners take some of each: enough salary for the RRSP room and CPP they want, and the rest as dividends. The right split depends on your plans.
How this is calculated
- Split your pay. The slider sets the share of your gross pay taken as salary; the rest is non-eligible dividends. The calculator finds the gross pay that leaves exactly the cash you asked for.
- Personal side. Salary is taxed as employment income with CPP and CPP2 (no EI). Dividends are grossed up 15% and get the federal and provincial dividend tax credits. Basic personal amounts, the Canada employment amount and the BC tax reduction apply.
- Company side. Salary and the employer's CPP are deducted. Corporate tax is the small business rate on the first $500,000 and the general rate above. Dividends come out of what is left after tax.
- RRSP room. 18% of salary, up to $35,390 (the 2027 limit, because 2026 earnings create 2027 room).
| First $500,000 | Above that | |
|---|---|---|
| British Columbia | 11% 9% federal + 2% BC | 27% 15% federal + 12% BC |
| Alberta | 11% 9% federal + 2% AB | 23% 15% federal + 8% AB |
| Eligible | Non-eligible | |
|---|---|---|
| Gross-up | 38% | 15% |
| Federal credit | 15.0198% | 9.0301% |
| BC credit | 12% | 1.96% |
| Alberta credit | 8.12% | 2.18% |
Credits are a percentage of the grossed-up (taxable) dividend.
| CPP rate (employee, employer pays the same) | 5.95% of earnings from $3,500 to $74,600 |
| CPP2 rate (employee, employer pays the same) | 4% of earnings from $74,600 to $85,000 |
| Maximum CPP + CPP2 (employee) | $4,646.45 |
| Self-employed CPP | Both shares: 11.9% and 8% |
| EI rate (employee) | 1.63% up to $68,900 (max $1,123.07) |
| EI employer | 1.4 × the employee premium |
| 2026 RRSP dollar limit | $33,810 |
| 2027 RRSP dollar limit | $35,390 |
| New room | 18% of last year’s earned income, up to the limit |
| Deadline for 2026 contributions | Monday, March 1, 2027 |
| Taxable income | Rate |
|---|---|
| Up to $50,363 | 5.6% |
| $50,363 to $100,728 | 7.7% |
| $100,728 to $115,648 | 10.5% |
| $115,648 to $140,430 | 12.29% |
| $140,430 to $190,405 | 14.7% |
| $190,405 to $265,545 | 16.8% |
| Over $265,545 | 20.5% |
| Taxable income | Rate |
|---|---|
| Up to $61,200 | 8% |
| $61,200 to $154,259 | 10% |
| $154,259 to $185,111 | 12% |
| $185,111 to $246,813 | 13% |
| $246,813 to $370,220 | 14% |
| Over $370,220 | 15% |
| Taxable income | 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% |
| Amount | Credit rate | |
|---|---|---|
| Federal basic personal amount | $16,452 falls to $14,829 between $181,440 and $258,482 of net income | 14% |
| Canada employment amount (federal) | $1,501 | 14% |
| BC basic personal amount | $13,216 | 5.6% |
| BC tax reduction | $690 less 3.56% of net income over $25,570 | – |
| Alberta basic personal amount | $22,769 | 8% |
What this leaves out
- BC employer health tax, WorkSafeBC or Alberta WCB premiums, and payroll costs.
- Passive income rules: more than $50,000 a year of investment income in the company shrinks the small business limit.
- Refundable taxes, eligible dividends paid from general-rate income (GRIP), capital dividends, and a business limit shared with associated companies.
- Income splitting rules (TOSI) for family members, minimum tax, other personal credits and deductions, and the value of CPP benefits later.
- The Alberta supplemental tax credit and the federal top-up tax credit (they only apply with much larger credits than the ones claimed here).
Set your pay mix with real numbers
Book a free 15-minute call by video or phone. We'll look at your company's profit, your savings plans and your family, and model salary and dividend options with you and explain the tax, CPP, RRSP and corporate-record effects before you decide.
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Salary or dividends, answered
Should I pay myself salary or dividends?
There is no single right answer. Salary is deducted by the company, builds RRSP room and earns CPP retirement benefits, but you and the company both pay CPP. Dividends skip CPP and payroll filings, but create no RRSP room and no CPP pension. Most business owners take some of each, and the right mix depends on your income, savings plans and how much you leave in the company.
Do dividends create RRSP room?
No. RRSP room comes from earned income such as salary: 18% of the previous year's earned income, up to the yearly limit. Salary paid in 2026 creates room for 2027, capped at the 2027 limit of $35,390. Dividends are investment income and create no room.
Do I pay CPP and EI on salary from my own corporation?
CPP, yes: you pay the employee share and your company pays the employer share, 5.95% each on earnings up to $74,600 in 2026, plus 4% each of CPP2 up to $85,000. EI, usually no: if you control more than 40% of the voting shares, your employment is generally not insurable, so this calculator charges no EI.
Why does the calculator use non-eligible dividends?
Profit taxed at the small business rate on the first $500,000 is paid out as non-eligible dividends, which get a 15% gross-up and a smaller dividend tax credit. Profit above $500,000 is taxed at the general rate and can support eligible dividends; this calculator treats all dividends as non-eligible to keep things simple.
What does this calculator leave out?
It is a simplified estimate. It ignores the BC employer health tax, WorkSafeBC and Alberta WCB premiums, the passive income rules that shrink the small business limit, refundable taxes and eligible dividend pools, sharing the business limit with associated companies, income splitting rules for family members, minimum tax, other personal credits, and the value of CPP benefits later.
What happens to the money left in the company?
It has already paid corporate tax, but you pay personal tax when you take it out later as salary or dividends. If it is invested, investment income in a corporation is taxed at high rates, and more than $50,000 a year of passive income starts to reduce the small business limit. Leaving money in the company delays personal tax; it does not remove it.