What are Canada’s Tax Brackets?

Tax brackets exist at both the federal and provincial or territorial level in Canada. Your income determines your tax bracket, and ultimately, the tax rate you'll pay.

Man at desk calculating his Canadian tax bracket.

Canada’s income tax rates are divided into different levels, often referred to as “brackets.”

The federal income tax bracket you belong to depends on how much you earned during the year. Provinces and territories have their own tax brackets, which also depend on your income.

What are tax brackets?

Tax brackets determine the rate of income tax people pay according to Canada’s graduated tax system. Generally, those with higher incomes fall into a higher tax bracket, so they pay a higher tax rate than people with lower incomes, who fall into lower tax brackets.

Current tax brackets in Canada

2024 Federal income tax bracket	2024 Federal income tax rate
$55,867 or less	15%
$55,867.01 up to $111,733	20.5%
$111,733.01 up to $173,205	26%
$173,205.01 up to $246,752	29%
More than $246,752	33%

How tax brackets work in Canada

Each tax bracket has a corresponding rate of taxation. That rate is applied to the portion of your taxable income that falls within the bracket.

To find your taxable income, you’ll add up your income from various sources, including employment, government benefits, interest, and investments. Then you’ll apply any deductions or exemptions you qualify for. You can do this using a paper tax return or tax software, which handles the calculations for you.

How tax brackets work is often misunderstood. When your income reaches a new tax bracket, you don’t pay the higher rate on all of your income — just on the portion that falls into that higher bracket.

Let’s say your taxable income for 2024 is $60,000, which reaches the second federal tax bracket. You’ll pay 15% tax on the first $55,867 of income, and then 20.5% tax on the remaining $4,133.

Federal income tax is just one part of your total tax bill. In Canada, there are also provincial and territorial tax brackets to factor in. Provinces and territories each have their own graduated tax brackets, income limits and tax rates that differ from one another and the federal rates and tax brackets.

This means that if you and a friend both have the same amount of taxable income, but you live in Ontario and they live in British Columbia, your overall tax rates — federal plus provincial — will likely be different.

How to determine your tax bracket

Your federal tax bracket depends on your taxable income, and your provincial/territorial tax bracket depends on your taxable income and where you live in Canada.

To figure out which federal and provincial tax brackets you are in, you’ll need to know your total taxable income. That means adding up your total income from all sources, like your job plus any investments, rental income or government benefits, and then subtracting any eligible deductions.

Usually, you’ll calculate your taxable income as you fill out your tax return. But you can also estimate it in a few ways to have an idea of which tax bracket you fall into.

If you’re an employee, whether you work full time or part time, your last pay stub of the year can give you a good idea. Each stub shows both your gross and net pay for the current pay period, as well year-to-date totals. Compare the total year-to-date pay on your final pay stub of the year to the tax brackets above to see which one you’ll likely fall into.

Before the tax season, your employer will also give you a T4 slip that summarizes your annual earnings and tax deductions for the year.

If you’re self-employed or freelancing and don’t get a traditional pay stub, you’ll need to keep close tabs on your gross income to determine which tax bracket it likely puts you in. Since your employers won’t be deducting taxes from your income, it will help if you can set this money aside yourself.

By March, you should receive a T4A slip from the CRA, which you can use to tally income from sources like pensions and some government benefits.

Can I move to a lower tax bracket?

Paying income tax is unavoidable if you’re living and working in Canada, but there are ways to stay in or move to a lower tax bracket, and potentially decrease your tax bill.

Tax deductions, which reduce your taxable income, are one way. Apply enough deductions to your income and you may slide into a lower tax bracket. One popular tax deduction in Canada is for contributions made to a registered retirement savings plan, or RRSP.