When it comes to budgeting, it’s important to look at your take-home pay in PEI and not your gross income because you may not be taking home as much income from work as you think.
As a resident of Canada, you must pay income taxes to help maintain the country’s economy. Your taxes will then affect your gross annual income, leaving you with your net pay. However, depending on where you live, the amount of taxes you pay will differ.
Here’s how much taxes you’ll pay in Prince Edward Island (PEI).
How To Calculate Your Net Salary In PEI
While PEI has different tax rates than other parts of Canada, it’s pretty easy to calculate your net or take-home salary. Your take-home pay in PEI is how much money you actually get to keep once federal taxes, provincial taxes and other deductions are taken out from your gross annual salary.
Take-Home Pay In PEI Calculation
Here is a basic formula you can follow to help you calculate your take-home pay in PEI:
| Take-Home Pay = | Gross Salary – Federal Taxes – Provincial Taxes – EI – CPP |
What Are The EI And CPP Deductions?
The largest portion of your income tax deductions will be your federal taxes, provincial taxes, CPP and EI:
Canada Pension Plan (CPP)
The Canadian Pension Plan is a federal contributory program that provides social assistance to Canadians following retirement. You must contribute regularly during your career, and the size of your contributions is based on your gross earnings. In exchange, the CPP gives you a regular income after you retire, as well as disability and death & survivors benefits.
Employment Insurance (EI)
EI is a monthly contributory program (also federal) that provides temporary income to Canadians who become unemployed or incapable of working for valid reasons, such as:
- Loss of employment without fault
- Illness or caring for an ill family member
- Pregnancy or parental benefits
The amount you contribute each month will vary based on your income as well as the maximum insurable earnings (MIE).
How Much Income Taxes Do You Pay In PEI?
Canada has a graduated tax system, meaning the more money you make, the more you pay in income taxes. The rate you pay will depend on the income tax brackets you fall in.
How Much Federal Taxes Do You Have To Pay In PEI?
The federal tax amounts are the same across Canada. Here are the income tax rates and income tax brackets for the federal taxes:
| Federal Tax Rate | Federal Income Tax Brackets |
| 15% | Applicable to taxable income up to $57,375 |
| 20.5% | Applicable to taxable income over $57,375 up to $114,750 |
| 26% | Applicable to taxable income over $114,750 up to $177,882 |
| 29% | Applicable to taxable income over $177,882 up to $253,414 |
| 33% | Applicable to taxable income over $253,414 |
How Much Provincial Taxes Do You Have To Pay In PEI?
The tax rate you pay and the tax bracket you fall in will vary from province to province. Here’s how much you’ll pay in PEI.
| 9.8% | Applied to taxable income of $31,984 or less |
| 13.8% | Applied to taxable income over $31,984 to 63,969 |
| 16.7% | Applied to taxable income over $63,969 |
How Much Will Your Take-Home Pay Be In PEI?
Here’s your net salary in PEI once all the major tax deductions are applied:
| Income Taxes | CPP/EI Deductions | Take-Home Pay In PEI | |
| $30,000 | $3,493 | $1,985 | $24,523 |
| $60,000 | $12,011 | $4,169 | $43,821 |
| $100,000 | $26,688 | $4,453 | $68,859 |
What Is The Minimum Wage In PEI?
In Prince Edward Island, the current minimum wage is $14.50 per hour. So, if you work a typical full-time job offering 40 hours a week, for 50 weeks a year (assuming you take 2 weeks unpaid vacation), you’ll earn $29,000 annually before taxes. Here’s what your take-home (net) pay would be after taxes:
- Total Income Tax Deduction = $3,262
- CPP/EI Deductions = $1,912
- Net Income = $23,826
PEI Tax Credits That Can Affect Your Income Taxes
Although the Canadian government offers its own federal tax benefits, you may also qualify for tax credits that are specific to your province or territory. Here are some of the refundable and non-refundable tax credits you can apply for in Prince Edward Island:
- Children’s Wellness Tax Credit – This is a non-refundable $500 tax credit that offers financial relief for families with children enrolled in any organized activities.
- PEI’S Low-Income Tax Reduction – This credit reduces your taxable income if the following factors applied to you on December 31st of the relevant tax year:
- You were a PEI resident and at least 19 years old
- You were a parent
- OR
- You had a spouse or common-law partner
- PEI’s Volunteer Firefighter Tax Credit – This refundable tax credit offers up $100 in financial relief to volunteer firefighters in Prince Edward Island.
- Teacher School Supply Amount – If you’re a teacher at a learning and childcare center in PEI, you can claim up to $500 to cover eligible school supply costs.
PEI Average Salary
According to the Government of Canada, here was the average and median income for all Prince Edward Island residents aged 16 and over in 2020:
- Average Annual Salary = $46,200
- Median Annual Salary = $39, 200
Take-Home Pay Across Canada
- Calculate Your Take-Home Pay In Nova Scotia
- Calculate Your Take-Home Pay In PEI
- Calculate Your Take-Home Pay In Saskatchewan
- Calculate Your Take-Home Pay In Newfoundland and Labrador
- Calculate Your Take-Home Pay In Alberta
- Calculate Your Take-Home Pay In British Columbia
- Calculate Your Take-Home Pay In Ontario
Are You A Taxpayer In Prince Edward Island?
It’s important to understand how your take-home pay differs from your gross annual salary. The gap between the two can be significant. Your monthly take-home pay number is essential to your budget. It will help you determine how much you can spend, save, and invest.
Take-Home Pay PEI FAQs
What’s the difference between your gross and net salary?
How much taxes will I pay if I make $50,000 in PEI?
What’s the benefit of knowing your gross pay and net pay?
Are there any tax credits or deductions I can claim to lower my income taxes?
- Childcare costs
- Moving costs
- Union dues or professional costs
- Contributions to your registered Retirement Savings Plan (RRSP)
- Employer contributions to your Registered Pension Plan (RRP)
