Counter Offer on Salary: What It Changes Net

You have an offer somewhere else. You mention it, and your employer comes back with a counter offer: $5,000 more a year. The conversation happened in gross dollars, as it always does. What lands in your bank account is net pay — and the gap between the two is what decides whether the counter offer is really worth what it promises.

A counter offer is negotiated in gross and lived in net

Gross is the salary written in the contract, before anything is taken off. Net is what is left once federal tax, Quebec tax and payroll contributions have been withheld. A counter offer is always announced in gross, never in net.

Take a deliberately round case. You earn $70,000 a year in Quebec, and the counter offer takes you to $75,000. On paper, $5,000 more. In practice, about $2,947 more in net pay per year — roughly $246 a month.

Where the difference goes, line by line

It is not one single deduction but the sum of five. Here is what each part of the $5,000 counter offer becomes, using the 2026 parameters of the Salarium calculator.

Federal tax is calculated in brackets: each slice of income is taxed at its own rate. At this salary level, the counter offer falls in the second federal bracket, the one that starts at $58,523; the 2026 tax brackets set it at 20.5%.

A Quebec resident does not pay that full rate to Ottawa, though. They get an abatement — a reduction of their federal tax — which remains at 16.5% for 2026. Once that reduction is applied, about 17.1% actually goes to the federal government, not 20.5%.

Quebec tax is added on top, with its own brackets. In the 2026 parameters used by the calculator, the Quebec bracket covering this income is 19%. That addition — the reduced federal share, then the Quebec share — is what accounts for most of the $2,053 withheld on the counter offer.

Average rate and marginal rate: two figures not to confuse

Two rates come up the moment tax is discussed, and mixing them up distorts the whole conversation.

The average rate is the share of your total salary that goes to taxes and contributions. On $75,000 in Quebec, it sits around 27.8%.

The marginal rate is the share taken from your next dollar, the one added at the very top of your income. On that same salary, its tax component is close to 36%, and once payroll contributions are added, the real bite on the counter offer is over 41%.

The second one is what matters in a negotiation. A counter offer is not added at the bottom of your income, where rates are low: it is added at the top, where they are highest. That is why $5,000 announced never feels like $5,000 received.

To put the whole thing in context, here is how the $75,000 salary breaks down once the counter offer is accepted.

Past certain ceilings, a counter offer pays more

Here is the part almost nobody sees coming: for an identical counter offer, the share you keep can be higher on a large salary than on a smaller one. The reason is simple — payroll contributions have ceilings, income tax does not.

• Employment Insurance is only withheld on the first $68,900 of insurable earnings, at the Quebec rate of 1.30%. Above that, nothing more is taken. That is why the "Employment Insurance" line in the table above shows $0: at $70,000, the ceiling had already been reached.
• The QPP works in two tiers. Contributions run up to a first ceiling of $74,600, then a second tier takes over between $74,600 and $85,000, at a rate of 4%. Past $85,000, the contribution stops growing.

The result shows up directly in the net pay you keep.

Same counter offer, $231 of difference in annual net pay. The tax itself is identical in both cases: both salaries stay in the same federal bracket and the same Quebec bracket. The entire gap comes from the contribution ceilings.

A one-time bonus is not a raise

Many counter offers arrive as a retention bonus paid once, rather than as an increase to base salary. For tax purposes, this is not a separate category: the Canada Revenue Agency requires the employer to report a bonus as employment income on the T4 slip for the year it is received, and to withhold income tax, QPP contributions and EI premiums on it — exactly as on salary. For the income tax portion, the employer applies what the CRA calls the bonus or irregular payments method.

So the real difference is not a tax one, it is a contractual one. And it is a big one. An increase to base salary comes back every year, and it becomes the starting point for the next salary review. A bonus paid once does neither.

The table assumes constant tax parameters and an otherwise unchanged salary; it is there to compare two forms of counter offer, not to predict three years of pay.

One last word on an optical effect. The amount withheld on the pay that carries the bonus can look very heavy on the pay stub. That is not the final tax bill, only an advance: the exact count is settled on your tax return.

Before you say yes: five things to check

• Ask for an annual gross figure. It is the only unit that compares between two offers. A monthly net amount depends on your personal situation and is hard to argue at the table.
• Separate the base salary increase from the one-time bonus. The two are worth the same in year one; beyond that, they have nothing in common.
• Run the numbers before the meeting. The net salary calculator gives the figure for your exact salary, before and after the counter offer.
• Look at where you sit relative to the ceilings. Around $68,900 and $85,000, the same extra gross does not leave the same net.
• Be careful if the outside offer is in another province. At equal gross, net pay changes from one province to another, as the comparison between Alberta and Quebec shows.

And if the counter offer does not follow a competing offer but simply a request of your own, the arithmetic is the same: it is laid out in our article on how much to ask for against inflation.