Tax Breakdown in Canada
|Salary Before Tax|
|Total Tax Due|
|Salary After Tax||Enter salary|
|CPP/QPP, EI premiums, QPIP|
|Your Take-Home Pay:|
|Your Gross Salary:|
|Effective Tax Rate:|
|Tax Deadline:||30 Apr|
How to Use the Income Tax Calculator for Canada
Our Canadian income tax calculator makes it easy to estimate your total taxes due. You simply need to select your province, enter your salary, choose your payment frequency, and then press "Calculate". You'll then see an estimated take-home salary and a breakdown of taxes due.
Of course, we can't account for every personal circumstance, so there are a few assumptions built into our tax calculator for Canada. The most significant assumptions are that you aren't married and have no dependants. These circumstances have a big influence over how you're taxed, so once you apply all tax credits, deductions, and allowances, you may owe less than initially estimated.
How Is Canadian Income Tax Calculated?
Calculating income tax in Canada is notoriously complicated, but we're going to break it down into its most basic pieces. The Canadian Revenue Agency (CRA) uses a progressive tax system, so you can expect to pay more in taxes as your income grows. However, your tax bracket isn't just tied to an income level — it also depends on your province and type of income.
That's why our Canadian income tax calculator includes estimates for Federal Tax and Provincial Tax as well as contributions for the Canada Pension Plan (CPP), Quebec Pension Plan (QPP), Employment Insurance (EI), and Quebec Parental Insurance Plan (QPIP). We'll take a closer look at these later in the Taxes in Canada section.
How Is Tax Paid in Canada?
The filing deadline for the previous tax year is April 30th — except for self-employed earners, in which case the deadline is extended to June 15th. You can file Canadian income tax online using CRA-approved tax software, manually by completing a paper tax return, or by hiring a tax representative. It's important to note that if you live in Quebec, your tax situation will look pretty different compared to other provinces. In this situation, you make payments through Revenu Quebec, not the CRA.
If you're an employee of a Canadian company, then your employer will automatically deduct income tax from your paycheck. These deductions are based on the TD1 Personal Tax Credits Return that you completed when you were hired. This return contains all of the tax credits that you were eligible for at the time of filling it out. You can update it if your personal circumstances change, and you can also request additional tax deductions directly from the CRA.
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Who Should Pay Tax in Canada?
Canadian income tax is also affected by your residency status. Generally speaking, everyone who earns an income in Canada must file a tax return — even members of the same household. The CRA distinguishes between people who live in or leave Canada permanently or temporarily. While the major statuses are tax residents and non-residents, there are plenty of qualifications in between to account for specific personal circumstances. As a rule of thumb:
are those who stay in Canada for fewer than 183 days each year and don't have significant residential ties in the nation (such as a home, spouse, or child). As a non-resident, you must file a tax return only for income earned from sources in Canada — such as employment, capital gains, or carrying out business in Canada.
are those who stay in Canada for at least 183 days, don't have significant residential ties, and aren't considered residents of another country. As a deemed resident, you must report your world income, pay federal tax, and pay a federal surtax (instead of a provincial or territorial tax). Deemed residents are also eligible to claim federal deductions and tax credits. Canada's tax treaties are in place to make sure you aren't double taxed.
are those who live and work in Canada with significant residential ties in the nation. As a resident, you must report your world income and pay federal and provincial taxes along with relevant premiums (see Taxes in Canada). Again, Canada's tax treaties with other countries make sure you aren't paying taxes twice.
What Tax Deductions and Credits Are Available in Canada?
Both tax deductions and credits can lower your total taxes due, but they aren't the same thing. Tax deductions reduce your taxable income, while tax credits reduce the tax you pay on your taxable income. These credits can be refundable (meaning they can be paid to you — even if you don't have any taxes due) or non-refundable (meaning they can only reduce or cancel your taxes). Non-residents aren't eligible for tax credits or deductions.
The CRA has made over 400 tax credits and deductions available. Here are just a few of them:
- Basic Personal Amount — is a non-refundable credit available to every taxpayer. The amount changes each year, but everyone is eligible to claim it to reduce their taxable income.
- Registered Pension Plan Deduction — lets you deduct the contributions you made to a registered pension plan during the tax year.
- Goods and Services Tax/Harmonized Sales Tax Credit — is a refundable tax credit that's paid out quarterly to offset the taxes Canadian families pay on consumer goods and services.
- Capital Gain Deduction — in some cases, you can deduct capital gains collected during the tax year.
- Disability Tax Credit — can be claimed on your income tax return if you have an impairment. Additional credits can be transferred to family members who act as caregivers.
- Disability Supports Deduction — if you have an impairment, you can deduct the treatment and living expenses you paid to continue going to work or school.
Remember that our income tax calculator for Canada has a few assumptions built in — your taxes will probably be lower than estimated once you account for eligible credits and deductions.
How Much Tax Do Canadians Pay on the Average Household Income?
It can be difficult to wrap your head around how each province's tax rate affects your income. That's why we compiled a table showing the tax outcome of an average Canadian household income in four of the most popular provinces. As of 2022, that average is $54,630 a year — here's what Canadian income tax would look like in Alberta, British Columbia (BC), Ontario, and Quebec.
For more information about making a living in the Great White North, visit our Salary Calculator for Canada where we dig into the average salary, common salaries by industry, and the minimum wage.
|Gross salary of $54,630 per year|
|Province||Take-Home Pay||Effective Tax Rate||Tax Due|
|British Columbia (BC)||$43,053||21%||$11,577|
Taxes in Canada
As we briefly mentioned earlier, there are four major expenses that make up individual income tax in Canada. Depending on your residency status and the province in which you live, the tax implications of these expenses will differ. For a quick estimate, our Canadian tax calculator takes all four of these into account. Here's what you need to know about each one:
Anyone who makes money in Canada, whether they're residents, deemed residents, or non-residents, must pay federal taxes. The federal tax rate is progressive, starting at 15% and topping out at 33%. If you're a Canadian employee, federal taxes are automatically deducted from your paychecks.
|Tax Bracket||Tax Rate|
|$0 to $50,197||15%|
|$50,198 to $100,392||20.5%|
|$100,393 to $155,625||26%|
|$155,626 to $221,708||29%|
|$221,709 or more||33%|
In addition to federal tax, Canadians owe provincial tax on any income generated within a certain province or territory. Each province and territory in Canada sets its own tax rates and brackets. Neither provincial nor territorial taxes are deductible while calculating federal tax. Note that your tax situation will be very different if you live in Quebec. You can find a complete list of provincial and territorial tax rates on the Government of Canada website.
Canada Pension Plan (CPP/QPP)
Canadian employees must make contributions to the CPP (or QPP for Quebec residents), a fund that ensures financial protection for contributors who lose an income due to retirement, disability, or death. These deductions are made automatically by your employer on every paycheck. Employers also need to match your contributions. The Government of Canada website lists the CPP contribution rates for the current tax year, while the Revenue Quebec website lists the current QPP rates.
Employment Insurance (EI)
All Canadian employees also have to pay EI premiums every month. EI is a social insurance program that temporarily supports people who are unemployed while they look for a job or learn new skills. EI premiums vary based on your income level, and are automatically deducted from earnings by your employer. Employers must also make EI contributions based on your premium. The Government of Canada website publishes each year's EI premium rates, including the ones applicable for Quebec.