Tax Rates By Province

Taxes maintain the quality of life we enjoy as Canadians. Taxes collected by the federal and provincial government helps provide funding for a number of programs and services we use and rely on such as health care, education, roads, waste collection, and other economic and cultural activities.

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 tax rate and the province you live in.

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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 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 multiple rates depending on your income level.

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.

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How Does The Tax Rate Work?

In Canada, there are 5 tax brackets you can fall in at a federal level. Depending on how high your income is you can fall in 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 $100,000 in 2019, you’d be subject to 3 of the 5 tax brackets seen below.

Tax Rate	Income Level Brackets	Taxable Income	Taxes Owed
15%	Under $47,630	47,630*15%	7,144.5
20.5%	$47,630 – $95,259	47,629*20.5%	9,763.9
26%	$95,259 – $147,667	4,741*26%	1,232.6
29%	147,667 – $210,371	–	–
33%	Over $210,371	–	–

As seen in the table, only a portion of your income is taxed at each tax bracket. The total taxes owed by this person would equal $18,141. Don’t forget, this accounts for just the federal taxes, you’ll have to check your province’s tax rates to see how much provincial taxes you owe. In total, you can end up paying up to 30% within the first tier.

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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 you can reduce the amount you owe. Of course, for employees, this tax amount is deducted from your paycheque.

Tax Rates

While the federal tax rates are the same for everybody in Canada, provincial tax rates differ by province. Below, we’ve depicted the rates you’ll have to pay based on your income. Of course, as mentioned above, this amount is usually deducted from your paycheque, but if you’re a gig worker or contract worker, you’ll want to put this money aside for tax season.

Federal Tax Rate

Under $47,630	15%
$47,630 – $95,259	20.5%
$95,259 – $147,667	26%
$147,667 – $210,371	29%
Over $210,371	33%

Provincial Tax Rate

Newfoundland and Labrador
Under $37,929	08.07%
$37,929 – $75,858	14.50%
$75,858 – $135,432	15.80%
$135,432 – $189,604	17.30%
Over $189,604	18.30%
Nova Scotia
Under $29,590	08.79%
$29,590 – $59,180	14.95%
$59,180 – $93,000	16.67%
$93,000 – $150,000	17.50%
Over $150,000	21.00%
Prince Edward Island
Under $31,984	09.80%
$31,984 – $63,969	13.80%
Over $63,969	16.70%
New Brunswick
Under $43,401	09.68%
$43,401 – $86,803	14.82%
$86,803 – $141,122	16.52%
$141,122 – $160,776	17.84%
Over $160,776	20.30%
Ontario
Under $44,740	05.05%
$44,740 – $89,482	09.15%
$89,482- $150,000	11.16%
$150,000- $220,000	12.16%
Over $220,000	13.16%
Quebec
Under $44,545	15.00%
$44,545 – $89,080	20.00%
$89,080 – $108,390	24.00%
Over $108,390	25.75%
Manitoba
Under $33,389	10.80%
$33,389 – $72,164	12.75%
Over $72,164	17.40%
Saskatchewan
Under $45,225	10.50%
$45,225 – $129,214	12.50%
Over $129,214	14.50%
Alberta
Under $131,220	10.00%
$131,220 – $157,464	12.00%
$157,464- $209,952	13.00%
$209,952- $314,928	14.00%
Over $314,928	15.00%
British Columbia
Under $41,725	05.06%
$41,725 – $83,451	07.70%
$83,451 – $95,812	10.50%
$95,812 – $116,344	12.29%
$116,344 – $157,748	14.70%
Over $157,748	16.80%
Yukon
Under $48,535	06.4%
$48,535 – $ 97,069	09.00%
$97,069 – $151,473	10.90%
$151,473 – $501,000	12.80%
Over $501,000	15.00%
Nunavut
Under $46,277	04.00%
$46,277 – $92,555	07.00%
$92,555 – $150,473	09.00%
Over $150,473	11.50%
Northwest Territories
Under $43,957	05.90%
$43,957 – $87,916	08.60%
$87,916 – $142,932	12.20%
Over $142,932	14.05%

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 their 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.

Bottom Line

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 because it will help you save money during tax season.

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Priyanka Correia

Priyanka is a personal finance expert at Loans Canada. She is passionate about money management and educating Canadian consumers about how to take control of their financial lives. She has taken financial control of her life by using Mint to budget and track her expenses while growing her wealth by investing through Wealthsimple. She also believes in having an emergency fund, so she keeps a good sum of money in an easily accessible high-interest savings account. She also uses the American Express Cobalt Card to earn points on all her purchases, further fueling her savings goal. She also uses Loans Canada’s lender directory whenever she wants to compare rates from different lenders.