🇨🇦 Understanding Personal Income Tax in Canada (2026)
In Canada, income tax is collected at two levels: Federal and Provincial/Territorial. Your total tax bill is the sum of these two, calculated using a progressive tax system—meaning higher earners pay a higher percentage.
1. Federal Income Tax Brackets (2026)
As of 2026, the federal government has adjusted tax brackets. Notably, the lowest rate has been reduced to help residents with the cost of living.
• Up to $58,523: 14%
• $58,523 – $117,045: 20.5%
• $117,045 – $181,440: 26%
• $181,440 – $258,482: 29%
• Over $258,482: 33%
2. Provincial Tax Rates (Approximate Range)
Each province sets its own rates. Depending on where you settle, your provincial tax could vary significantly:
• Ontario (ON): 5.05% ~ 13.16%
• British Columbia (BC): 5.06% ~ 20.5%
• Alberta (AB): 8% ~ 15% (Alberta often has the lowest top rates for high earners)
3. Payroll Deductions: More than Just Tax
When you receive your paycheck, the "Net Pay" (take-home pay) will be lower than your "Gross Pay" because of mandatory contributions:
• CPP (Canada Pension Plan): Contribution toward your retirement.
• EI (Employment Insurance): Protection in case of job loss.
• Income Tax: Withheld by your employer and paid directly to the CRA (Canada Revenue Agency).
