Danielle Kubes is a trained journalist and investor who has written about personal finance for the past six years. Her writing has been published in The Globe and Mail, National Post, MoneySense, Vice and RateHub.ca. Danielle writes about investing and personal finance for Wealthsimple. She has a Bachelor of Humanities from Carleton University and a Master of Journalism from Ryerson University.
Canada uses a progressive tax system, which means the rate of tax increases as the amount of income increases.
Residents of Canada pay both federal and provincial/territorial taxes, which are both based on the progressive system, with different rates of tax applied at different levels of income.
Provincial taxes are based on your province of residence as of December 31. For example, say you are filing 2023 taxes, and you lived in Alberta for part of the year before moving to British Columbia in October, you would be subject to BC income tax and tax credits — in addition to federal taxes — because that’s where you were living on December 31.
Revenu Québec administers provincial taxes on behalf of Québec residents, but for the rest of Canada, the Canada Revenue Agency (CRA) is the government organization in charge of taxation, overseeing both federal and provincial/territorial taxes.
Remember: the information provided below is for general use only, and is not intended as tailored financial advice. Your personal situation is unique, and you should always consult a professional financial expert.
British Columbia tax brackets
Income tax in Canada is based on your taxable income. Your taxable income is your total gross income from all sources, less eligible deductions. Because Canada uses a progressive tax system, the more money you make, the higher the rate of tax you will pay. This applies to both federal and provincial taxes.
Federal tax bracket rates for 2023
The following are the federal tax rates for tax year 2023, according to the CRA:
|2023 federal income tax brackets||2023 federal income tax rates|
|$53,359 or less||15%|
|$53,359.01 to $106,717||20.5%|
|$106,717.01 to $165,430||26%|
|$165,430.01 to $235,675||29%|
|More than $235,675.01||33%|
British Columbia 2023 tax rates
The tax brackets for British Columbia for 2023 are:
|2023 British Columbia income tax brackets||2023 British Columbia income tax rate|
|On the first $45,654||5.06%|
|Over $45,654 up to $91,310||7.7%|
|Over $91,310 up to $104,835||10.5%|
|Over $104,835 up to $127,299||12.29%|
|Over $127,299 up to $172,602||14.7%|
|Over $172,602 up to $240,716||16.8%|
|More than $240,716||20.5%|
How to calculate income tax in British Columbia
Your marginal tax rate is the total amount of federal and provincial taxes you owe. For example, if your taxable income after deductions and exemptions was $42,000, your federal tax owing is 15%, and your BC provincial amount owing is 5.06%, your marginal tax rate (15% + 5.06%) is 20.06%.
If you want to get an estimate of how much income tax you owe on your taxable income, first calculate your federal income tax, then calculate your provincial tax, and add the amounts together.
So, if your taxable income was $42,000 and you didn’t have any deductions or credits, your calculation would be:
$42,000 x 15% = $6,300 (federal)
$42,000 x 5.06% = $2,125.20 (BC)
Total federal and provincial income tax on taxable income: $6,300 + $2,125.20 = $8,425.20
Note: In a progressive tax system, your income tax payable is cumulative. Depending on what tax bracket your taxable income falls in, you could be paying multiple rates of tax.
Let’s say your income is $49,000. You will still pay the same federal tax of 15%, since you are in the first tax bracket. That works out to $7,350.
For the BC portion, you will pay 5.06% on the first $45,654, which equals $2,310.09.
The remaining $3,346 ($49,000 - $45,654) will be taxed at 7.7% = $257.64.
Total BC tax owing: $2,310.09 + $257.64 = $2,567.73
Total taxes owing (federal + BC) = $9,917.73
How to reduce your taxes owing
Every taxpayer in Canada is eligible to claim federal deductions, and the provinces and territories have deductions for their residents. Here are some of the common ones, but it’s not a comprehensive list, so you should always check with a financial expert to ensure you are claiming all the credits and deductions you're entitled to.
Every taxpayer in Canada is eligible to claim a basic personal amount that reduces their taxable income. If your income is $165,430 or less, that credit for 2023 is $15,000. The credit amount varies and, if your income is between $165,430 and $235,675, it is calculated using the federal worksheet. If your income is more than $235,675, your credit amount is $13,520. There are additional credits for residents who are aged 65 or older, who have been classified as disabled, or who are caretakers to a person with a disability.
If your income is less than $15,000, you shouldn’t have to pay any income tax. You should still file your taxes, however, because all kinds of federal and provincial programs, such as the GST/HST credit, are based on your income as reported on your income tax return.
In BC, you are also eligible to claim a basic personal amount of $11,981. There are additional amounts for seniors, or if you are disabled, or care for a disabled person.
A deduction reduces your taxable income, lowering the amount that income tax will be based on. The CRA provides detailed information on both federal and province-/territory-specific deductions. Below are some of the most common deductions, but there may be others you qualify for, so you should always speak with a financial tax expert about your specific situation. (You can also call the CRA at 1-800-959-8281.)
Nonrefundable tax credits reduce the amount of tax you have to pay, but you are only eligible to claim them if you owe taxes. In other words, you need to have earned some kind of income. For nonrefundable tax credits, you can claim enough to reduce your taxes to zero, but you won’t get the excess as a refund. So, if you owe $4,000 in taxes, but you have $4,500 in nonrefundable tax credits, you can claim $4,000, but you won’t get $500 as a refund. In some circumstances, such as tax credits for tuition, student loan interest, and donations, your remaining unused credits can be carried forward to future years.
The most common federal nonrefundable tax credits are things like the basic personal amount, medical expenses, and charitable or political donations. British Columbia has a number of additional tax credits for its residents on top of the basic personal amount. For example, if you are a volunteer firefighter or a search and rescue volunteer, you may be eligible to claim an exemption. You may be eligible to claim a BC logging or mining credit, Farmers’ Food Donation Tax Credit, British Columbia Home Renovation Tax Credit for Seniors and Persons with Disabilities, unused tuition credits, or other credits for medical expenses and political donations.
Frequently asked questions
BC tax brackets are added to federal tax brackets to determine the total amount of income tax you’ll pay. For 2023, the highest combined marginal tax rate is 53.5% on every dollar you make over $240,716. The lowest marginal tax rate is 20.06% on the first $45,654 you make.
Yes, BC tax brackets are incremental. The more you earn, the more tax you pay on that additional income. Incremental tax brackets mean that those who earn more pay a higher percentage of their income to the Canada Revenue Agency (CRA). A uniform tax rate would mean that everyone, no matter their income, paid the same percentage. That leads to high-income earners paying a relatively small amount.
Along with your federal tax, BC tax is owed by April 30.
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