As a senior member of the Loans Canada team, Priyanka Correia is committed to empowering Canadians with the knowledge they need to make smart financial choices. Expertise:
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 2026
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 2026
Newfoundland And Labrador Tax Rate
Newfoundland And Labrador Income Tax Brackets
8.7%
Applicable to the first $44,678 of taxable income
14.5%
Applicable to taxable income over $44,678 up to $89,354
15.8%
Applicable to taxable income over $89,354 up to $159,528
17.8%
Applicable to taxable income over $159,528 up to $223,340
19.8%
Applicable to taxable income over $223,340 up to $285,319
20.8%
Applicable to taxable income over $285,319 up to $570,638
21.3%
Applicable to taxable income over $570,638 up to $1,141,275
21.8%
Applicable to taxable incomes over $1,141,275
Prince Edward Island Income Tax Brackets And Tax Rates 2026
Prince Edward Island Tax Rate
Prince Edward Island Income Tax Brackets
9.5%
Applicable to the first $33,928 of taxable income
13.47%
Applicable to taxable income over $33,928 up to $65,820
16.6%
Applicable to taxable income over $65,820
Nova Scotia Income Tax Brackets And Tax Rates 2026
Nova Scotia Tax Rate
Nova Scotia Income Tax Brackets
8.79%
Applicable to taxable income up to $30,995
14.95%
Applicable to taxable income over $30,995 up to $61,991
16.67%
Applicable to taxable income over $61,991 up to $97,417
17.5%
Applicable to taxable income over $97,417 up to $157,124
21%
Applicable to taxable income over $157,124
New Brunswick Income Tax Brackets And Tax Rates 2026
New Brunswick Tax Rate
New Brunswick Income Tax Brackets
9.4%
Applicable to taxable income up to $52,333
14%
Applicable to taxable income over $52,333 up to $104,666
16%
Applicable to taxable income over $104,666 up to $193,861
19.5%
Applicable to taxable income over $193,861
Quebec Income Tax Brackets And Tax Rates 2026
Quebec Tax Rate
Quebec Income Tax Brackets
14%
Applicable to taxable income up to $54,345
19%
Applicable to taxable income over $54,345 up to $108,680
24%
Applicable to taxable income over $108,680 up to $132,245
25.75%
Applicable to taxable income over $132,245
Ontario Income Tax Brackets And Tax Rates 2026
Ontario Tax Rate
Ontario Income Tax Brackets
5.05%
Applicable to taxable income up to $53,891
9.15%
Applicable to taxable income over $53,891 up to $107,785
11.16%
Applicable to taxable income over $107,785 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 2026
Manitoba Tax Rate
Manitoba Income Tax Brackets
10.8%
Applicable to taxable income up to $47,000
12.75%
Applicable to taxable income over $47,000 up to $100,000
17.4%
Applicable to taxable income over $100,000
Saskatchewan Income Tax Brackets And Tax Rates 2026
Saskatchewan Tax Rate
Saskatchewan Income Tax Brackets
10.5%
Applicable to taxable income up to $54,532
12.5%
Applicable to taxable income over $54,532 up to $155,805
14.5%
Applicable to taxable income over $155,805
Alberta Income Tax Brackets And Tax Rates 2026
Alberta Tax Rate
Alberta Income Tax Brackets
8%
Applicable to taxable income up to $61,200
10%
Applicable to taxable income over $61,200 up to $154,259
12%
Applicable to taxable income over $154,259 up to $185,111
13%
Applicable to taxable income over $185,111 up to $246,813
14%
Applicable to taxable income over $246,813 up to $370,220
15%
Applicable to taxable income over $370,220
British Columbia Income Tax Brackets And Tax Rates 2026
British Columbia Tax Rate
British Columbia Income Tax Brackets
5.06%
Applicable to taxable income up to $50,363
7.7%
Applicable to taxable income over $50,363 up to $100,728
10.5%
Applicable to taxable income over $100,728 up to $115,648
12.29%
Applicable to taxable income over $115,648 up to $140,430
14.7%
Applicable to taxable income over $140,430 up to $190,405
16.8%
Applicable to taxable income over $190,405 up to $265,545
20.5%
Applicable to taxable income over $265,545
Yukon Income Tax Brackets And Tax Rates 2026
Yukon Tax Rate
Yukon Income Tax Brackets
6.4%
Applicable to taxable income up to $58,523
9%
Applicable to taxable income over $58,523 up to $117,045
10.9%
Applicable to taxable income over $117,045 up to $181,440
12.8%
Applicable to taxable income over $181,440 up to $500,000
15%
Applicable to taxable income over $500,000
Northwest Territories Income Tax Brackets And Tax Rates 2026
Northwest Territories Tax Rate
Northwest Territories Income Tax Brackets
5.9%
Applicable to taxable income up to $53,003
8.6%
Applicable to taxable income over $53,003 up to $106,009
12.2%
Applicable to taxable income over $106,009 up to $172,346
14.05%
Applicable to taxable income over $172,346
Nunavut Income Tax Brackets And Tax Rates 2026
Nunavut Tax Rate
Nunavut Income Tax Brackets
4%
Applicable to taxable income up to $55,801
7%
Applicable to taxable income over $55,801 up to $111,602
9%
Applicable to taxable income over $111,602 up to $181,439
11.5%
Applicable to taxable income over $181,439
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 $53,891
$53,891 x 5.05%
9.15%
Applicable to taxable income over $53,891 up to $107,785
$53,891.01 x 9.15%
11.16%
Applicable to taxable income over $107,785 up to $150,000
$12,218 x 11.6%
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 Senior Editor 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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