Marginal Tax Advice in Canada

The marginal tax rate in Canada is applied to the last dollar of income earned. It’s a progressive tax rate, meaning that the tax rate on additional income increases as income increases. This system aims to tax higher earners more than lower earners.

Federal Tax Brackets in Canada

Canada has both federal and provincial/territorial tax brackets. While federal tax brackets are consistent across the country, provincial/territorial rates vary by province or territory of residence.

• 15%: $55,867 or less
• 20.5%: $55, 867 – $111, 733
• 26%: $111, 733 – $173, 205
• 29%: $173,205 – $246, 752
• 33%: >$246,752

How do Marginal Tax Rates Work in Canada?

The marginal tax rate applies only to the income earned within a specific bracket. If your income moves into a higher tax bracket, only the income earned over the previous threshold is taxed at the higher rate.

This addresses the common misconception that moving into a higher tax bracket will cause your income to be taxed at a higher rate.

Provincial Marginal Tax Rates in Canada