In the majority of Canada, when you purchase an item you’ll notice your receipts have a Goods and Services Tax (GST) and a Provincial Sales Tax (PST). These two taxes reflect the taxes collected by the federal and provincial governments when you make a purchase. In addition to that, we pay taxes on our income. But how much are you paying? Do you know? Well, the amount you pay depends on your federal and provincial income tax rates.
What Are Tax Rates?
In Canada, every year all individuals and businesses must report their income for tax purposes. As mentioned, the amount you pay is dependent on your tax rate, also known as your tax bracket, which corresponds to your income level and the province you live in.
To understand this you need to understand the tax system used in Canada.
Canada’s Marginal Tax Rate System
Canada uses a marginal tax rate system to determine how much taxes you will have to pay. The way this system works is the higher your income is, the more you will be taxed. However, it is important to note that your entire income isn’t taxed at one rate but at multiple rates depending on your income level.
What If You Can’t Afford To Pay Your Taxes?
Whether you weren’t expecting to pay as much in taxes or struggling with other debts, there can be several reasons why you may not be able to afford to pay your taxes. Fortunately, there are a few things you can do:
Contact The CRA – If you’re unable to pay your taxes outright, you can contact the CRA to create a payment plan that will allow you to repay your taxes owed in installments. Similarly, if you’ve experienced a major life event that has disrupted your finances, you may qualify for taxpayer relief. This will waive any penalties and interest on paying your taxes late.
Use A Personal Loan – If the CRA doesn’t think you qualify for a payment plan, you can opt for a personal loan. You can spread your tax debt over a few months or years, depending on your financial situation. Before choosing this option, it’s best to clean up your finances as much as you can. This will help you qualify for a low-interest rate. This is crucial to keep your payments and costs low. One of the best things you can do is to check your credit score and ensure it is within at least the fair range (659 – 560).
Provincial Tax Brackets In Canada 2025
Depending on the province you live in, the taxes you’ll need to pay will vary. While some provinces have lower rates and higher tax brackets, others have high rates and lower tax brackets. Of all the provinces, Quebec is known to have the highest provincial taxes rates in Canada.
Newfoundland And Labrador Income Tax Brackets And Tax Rates 2025
Newfoundland And Labrador Tax Rate
Newfoundland And Labrador Income Tax Brackets
8.7%
Applicable to the first $44,192 of taxable income
14.5%
Applicable to taxable income over $44,192 up to $88,382
15.8%
Applicable to taxable income over $88,382 up to $157,792
17.8%
Applicable to taxable income over $157,792 up to $220,910
19.8%
Applicable to taxable income over $220,910 up to $282,214
20.8%
Applicable to taxable income over $282,214 up to $564,429
21.3%
Applicable to taxable income over $564,429 up to $1,128,858
21.8%
Applicable to taxable incomes over $1,128,858
Prince Edward Island Income Tax Brackets And Tax Rates 2025
Prince Edward Island Tax Rate
Prince Edward Island Income Tax Brackets
9.8%
Applicable to the first $31,984 of taxable income
13.8%
Applicable to taxable income over $31,984 up to $63,969
16.7%
Applicable to taxable income over $63,969
Nova Scotia Income Tax Brackets And Tax Rates 2025
Nova Scotia Tax Rate
Nova Scotia Income Tax Brackets
8.79%
Applicable to taxable income up to $30,507
14.95%
Applicable to taxable income over $30,507 up to $61,015
16.67%
Applicable to taxable income over $61,015 up to $95,883
17.5%
Applicable to taxable income over $95,883 up to $154,650
21%
Applicable to taxable income over $154,650
New Brunswick Income Tax Brackets And Tax Rates 2025
New Brunswick Tax Rate
New Brunswick Income Tax Brackets
9.4%
Applicable to taxable income up to $51,306
14%
Applicable to taxable income over $51,306 up to $102,614
16%
Applicable to taxable income over $102,614 up to $190,060
19.5%
Applicable to taxable income over $190,060
Quebec Income Tax Brackets And Tax Rates 2025
Quebec Tax Rate
Quebec Income Tax Brackets
14%
Applicable to taxable income up to $53,255
19%
Applicable to taxable income over $53,255 up to $106,495
24%
Applicable to taxable income over $106,495 up to $129,590
25.75%
Applicable to taxable income over $129,590
Ontario Income Tax Brackets And Tax Rates 2025
Ontario Tax Rate
Ontario Income Tax Brackets
5.05%
Applicable to taxable income up to $52,886
9.15%
Applicable to taxable income over $52,886 up to $105,775
11.16%
Applicable to taxable income over $105,775 up to $150,000
12.16%
Applicable to taxable income over $150,000 up to $220,000
13.16%
Applicable to taxable income over $220,000
Manitoba Income Tax Brackets And Tax Rates 2025
Manitoba Tax Rate
Manitoba Income Tax Brackets
10.8%
Applicable to taxable income up to $47,564
12.75%
Applicable to taxable income over $47,564 up to $101,200
17.4%
Applicable to taxable income over $101,200
Saskatchewan Income Tax Brackets And Tax Rates 2025
Saskatchewan Tax Rate
Saskatchewan Income Tax Brackets
10.5%
Applicable to taxable income up to $53,463
12.5%
Applicable to taxable income over $53,463 up to $152,750
14.5%
Applicable to taxable income over $152,750
Alberta Income Tax Brackets And Tax Rates 2025
Alberta Tax Rate
Alberta Income Tax Brackets
10%
Applicable to taxable income up to $151,234
12%
Applicable to taxable income over $151,234 up to $181,481
13%
Applicable to taxable income over $181,481 up to $241,974
14%
Applicable to taxable income over $241,974 up to $362,961
15%
Applicable to taxable income over $362,961
British Columbia Income Tax Brackets And Tax Rates 2025
British Columbia Tax Rate
British Columbia Income Tax Brackets
5.06%
Applicable to taxable income up to $49,279
7.7%
Applicable to taxable income over $49,279 up to $98,560
10.5%
Applicable to taxable income over $98,560 up to $113,158
12.29%
Applicable to taxable income over $113,158 up to $137,407
14.7%
Applicable to taxable income over $137,407 up to $186,306
16.8%
Applicable to taxable income over $186,306 up to $259,829
20.5%
Applicable to taxable income over $259,829
Yukon Income Tax Brackets And Tax Rates 2025
Yukon Tax Rate
Yukon Income Tax Brackets
6.4%
Applicable to taxable income up to $57,375
9%
Applicable to taxable income over $57,375 up to $114,750
10.9%
Applicable to taxable income over $114,750 up to $177,882
12.8%
Applicable to taxable income over $177,882 up to $500,000
15%
Applicable to taxable income over $500,000
Northwest Territories Income Tax Brackets And Tax Rates 2025
Northwest Territories Tax Rate
Northwest Territories Income Tax Brackets
5.9%
Applicable to taxable income up to $51,964
8.6%
Applicable to taxable income over $51,964 up to $103,930
12.2%
Applicable to taxable income over $103,930 up to $168,967
14.05%
Applicable to taxable income over $168,967
Nunavut Income Tax Brackets And Tax Rates 2025
Nunavut Tax Rate
Nunavut Income Tax Brackets
4%
Applicable to taxable income up to $54,707
7%
Applicable to taxable income over $54,707 up to $109,413
9%
Applicable to taxable income over $109,413 up to $177,881
11.5%
Applicable to taxable income over $177,881
How Does The Provincial Income Tax Rate Work?
In Canada, there are 5 tax brackets you can fall into at a federal level. Depending on the province you live in, there may be more or less than that on a provincial level. Similarly, depending on how high your income is, you can fall into one or more of the tax brackets. However, only a portion of your income is subject to each bracket.
So, while a portion of your income will always be taxed at the lowest rate, you’ll only be subject to the higher tax rate if your income meets that tax bracket. The marginal tax system may be hard to comprehend, but it’s easy to understand when seen as an example.
For example, if you make $120,000 in Ontario, you’d be subject to 3 of the 5 tax brackets seen below.
Ontario Tax Rate
Ontario Income Tax Brackets
Taxable Income Under Each Bracket
5.05%
Applicable to taxable income up to $52,886
$52,886 x 5.05%
9.15%
Applicable to taxable income over $52,886 up to $105,775
$52,886 x 9.15%
11.16%
Applicable to taxable income over $105,775 up to $150,000
$14,228 x 11.6%
12.16%
Applicable to taxable income over $150,000 up to $220,000
13.16%
Applicable to taxable income over $220,000
As seen in the table, only a portion of your income is taxed at each tax bracket. Don’t forget, this only accounts for provincial taxes, you’ll also need to consider the federal tax rates to see how much taxes you owe.
It is incredibly advantageous to know which tax bracket you fall in, especially as a contract or gig worker. Understanding which tax bracket you fall in can help you calculate your tax bill and plan how to reduce the amount you owe. Of course, this tax amount is deducted from your paycheque for employees.
As Supreme Court Justice Oliver Wendell Holmes Jr said “taxes are the price we pay for civilization”. The roads, education, health care, and all other public services we have access to are all funded by the taxes we pay. Besides paying your taxes, understanding the tax system is also important as it can help you save money during tax season.
Provincial Income Tax Rates FAQs
Why do we pay taxes?
Taxes maintain the quality of life we enjoy as Canadians. Taxes collected by the federal and provincial governments help provide funding for many programs and services we use and rely on such as health care, education, roads, waste collection, and other economic and cultural activities.
Why are the tax rates different by province?
Due to the division of legislative powers between the federal and provincial governments, each province in Canada manages its own finances. As such, each province has its own financial priorities, responsibilities, and problems. Depending on your province’s budget and economic plans, the province can adjust their provincial tax to match its needs. For example, in Canada, Quebec has the highest tax rates, but as a result, it has cheaper tuition, affordable daycares, and extra tax credits like the Solidarity Tax Credit.
Why do we have a marginal tax system?
The main advantage of a marginal tax system is that it relies on the affluent to support the government more than those who have a lower income. This ensures that the taxes collected from low-income earners are not affecting their quality of life and that the amount of taxes collected is affordable for everyone.
Priyanka Correia is a Marketing Coordinator and personal finance expert at Loans Canada. Priyanka completed her Bachelor's degree in Marketing at Concordia University and has published work that has been mentioned in various news media. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives.
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