Sing along with us: It’s the least wonderful time of the year! Yep, it’s that time when you and your fellow Canadians have to determine how much you owe in taxes. While calculating your taxes can be exhausting, confusing, or frustrating, we’re going to help. Here we’ve collected everything you need to know about this year’s income tax rates.
Federal Tax Bracket Rates for 2025
According to the Canada Revenue Agency (CRA), these are the federal tax rates for tax year 2025:
2025 federal income tax brackets | 2025 federal income tax rates |
|---|---|
| $57,375 or less | 15% |
| over $57,375 to $114,750 | 20.5% |
| over $114,750 to $177,882 | 26% |
| over $177,882 to $253,414 | 29% |
| More than $253,414 | 33% |
How to identify your tax bracket(s)
Your tax bracket is based on “taxable income,” which is your gross income from all sources, minus any tax deductions you may qualify for. In other words, it’s your net income after you've claimed all your eligible deductions.
Once you know what your taxable income is, you’ll then apply the relevant federal and provincial/territorial rates to it. Your tax rate will vary by how much income you declare at the end of the year on your T1 General Income Tax Return and where you live in Canada.
Importantly, your provincial or territorial rate is determined by the province/territory you are living in on December 31 of the tax year. So, if you move from Ontario to Nova Scotia, as long as you’re living in Nova Scotia on December 31, you would fall under the Nova Scotia provincial tax rates.
To calculate your federal income tax and your provincial or territorial rate, add the two together, and bam – you’ve got your “average tax rate,” the combined federal and provincial/territorial income taxes you pay on all sources of income at tax time.
Provincial/territorial tax bracket rates 2025
Remember that these are in addition to federal tax. As we said above, the province or territory you live in on December 31 determines the provincial/territorial portion of your income tax. So, if you’re planning on moving to a province or territory with lower taxes, do it before December 31. The following are the provincial/territorial tax rates for 2025 (in addition to federal tax) according to the CRA:
Province/Territory | Tax Rate |
|---|---|
| British Columbia | 5.06% on the first $49,279 of taxable income |
| 7.7% on taxable income over $49,279 up to $98,560 | |
| 10.5% on taxable income over $98,560 up to $113,158 | |
| 12.29% on taxable income over $113,158 up to $137,407 | |
| 14.7% on taxable income over $137,407 up to $186,306 | |
| 16.8% on taxable income over $186,306 up to $259,829 | |
| 20.5% on taxable income over $259,829 | |
| Alberta | 10% on the first $151,234 of taxable income |
| 12% on taxable income over $151,234 up to $181,481 | |
| 13% on taxable income over $181,481 up to $241,974 | |
| 14% on taxable income over $241,974 up to $362,961 | |
| 15% on taxable income over $362,961 | |
| Saskatchewan | 10.5% on the first $53,463 of taxable income |
| 12.5% on taxable income over $53,463 up to $152,750 | |
| 14.5% on taxable income over $152,750 | |
| Manitoba | 10.8% on the first $47,564 of taxable income |
| 12.75% on taxable income over $47,00047,564 up to $101,200 | |
| 17.4% on taxable income over $101,200 | |
| Ontario | 5.05% on the first $52,886 of taxable income |
| 9.15% on taxable income over $52,886 up to $105,775 | |
| 11.16% on taxable income over $105,775 up to $150,000 | |
| 12.16% on taxable income over $150,000 up to $220,000 | |
| 13.16% on taxable income over $220,000 | |
| Québec | 14% on the first $53,255 or less of taxable income |
| 19% on taxable income more than $53,255 but not more than $106,495 | |
| 24% on taxable income more than $106,495 but not more than $129,590 | |
| 25.75% on taxable income more than $129,590 | |
| New Brunswick | 9.4% on the first $51,306 or less of taxable income |
| 14% on taxable income over $51,306 up to $102,614 | |
| 16% on taxable income over $102,614 up to $190,060 | |
| 19.5% on taxable income over $190,060 | |
| Nova Scotia | 8.79% on taxable income that is $30,507 or less |
| 14.95% on taxable income over $30,507 up to $61,015 | |
| 16.67% on taxable income over $61,015 up to $95,883 | |
| 17.5% on taxable income over $95,883 up to $154,650 | |
| 21% on taxable income over $154,650 | |
| Prince Edward Island | 9.5% on the first $33,328 of taxable income |
| 13.47% on on taxable income over $33,328 up to $64,656 | |
| 16.6% on taxable income over $64,656 up to $105,000 | |
| 17.62% on taxable income over 105,000 up to $140,000 | |
| 19% on taxable income over $140,000 | |
| Newfoundland and Labrador | 8.7% on the first $44,192 or less of taxable income |
| 14.5% on taxable income over $44,192 up to $88,382 | |
| 15.8% on taxable income over $88,382 up to $157,792 | |
| 17.8% on taxable income over $157,792 up to $220,910 | |
| 19.8% on taxable income over $220,910 up to $282,214 | |
| 20.8% on taxable income over $282,214 up to $564,429 | |
| 21.3% on taxable income over $564,429 up to $1,128,858 | |
| 21.8% on taxable income over $1,128,858 | |
| Nunavut | 4% on the first $54,707 or less of taxable income |
| 7% on taxable income over $54,707 up to $109,413 | |
| 9% on taxable income over $109,413 up to $177,881 | |
| 11.5% on taxable income over $177,881 | |
| Yukon | 6.4% on the first $57,375 or less of taxable income |
| 9% on taxable income over $57,375 up to $114,750 | |
| 10.9% on taxable income over $114,750 up to $177,882 | |
| 12.8% on taxable income over $177,882 up to $500,000 | |
| 15% on taxable income over $500,000 | |
| Northwest Territories | 5.9% on the first $51,964 or less of taxable income |
| 8.6% on taxable income over $51,964 up to $103,930 | |
| 12.2% on taxable income over $103,930 up to $168,967 | |
| 14.05% on taxable income over $168,967 |
Remember: Your marginal tax rate is the total of both federal and provincial/territorial taxes on income.
How to calculate your taxes
For our example, let’s use Naveen in British Columbia. Naveen has been contributing to an RRSP to reduce his taxable income (way to go, Naveen!). After his RRSP contribution and other tax deductions and tax credits, he has taxable income of $60,000. Here’s how he would figure out his taxes:
Calculating the federal tax bill
Based on the updated 2025 federal tax rates (see that section above), the first $57,375 of his income is taxed at 15%, which works out to $8,606.25. Taking his total income ($60,000) and subtracting the first income tax bracket ($57,375), he has $2,625 of unaccounted-for income remaining. That amount will be taxed at a higher rate of 20.5%, which is $538.13. This means the total he owes in federal tax is $8,606.25 + $538.13, so $9,144.38.
Calculating the provincial tax bill
Remember, Naveen’s provincial rate is based on his province of residence as of December 31. Since Naveen lives in British Columbia (see the chart above for your province or territory’s rates), Naveen’s first $49,279 of income will be taxed at 5.06%, which equals $2,516.29. The remaining $10,721 of his income (found by taking his $60,000 total income minus the $49,279 he already calculated taxes on) will be taxed at 7.7%, which works out to $825.52. So to find his total provincial tax, he adds $2,516.29 + $825.52 to get $3,341.81.
Calculating the total tax bill
Naveen's combined federal and provincial taxes are $9,144.38 + $3,341.81, which adds up to $12,486.19. What a deal for being a law-abiding citizen!
Tax credits and tax deductions
Tax credits and tax deductions can reduce either your income or the amount of tax you owe. Learn the difference below.
Tax credits
Both federal and territorial/provincial tax credits exist, and you’ll be glad to hear they help you pay less tax. There are two types: non-refundable and refundable.
Non-refundable tax credits
A non-refundable tax credit reduces the amount of money you owe. In order to claim a non-refundable tax credit, you must actually owe taxes — in other words, you must have earned enough income to owe income tax. Non-refundable tax credits can reduce your tax owing to zero, but if you have more tax credits than tax owing, you do not receive a refund for any surplus amount. Here’s an example: if you owe $2,500 in taxes and have non-refundable tax credits for $2,700, your taxes will be reduced to zero (sweet!), but you will not receive the extra $200 (oh well).
Some non-refundable tax credits include:
Personal exemption amount (anyone who owes tax is entitled to claim this exemption)
Credit for taxpayers over age 65
Credit for people receiving a pension
Credit for people with a certified disability
Credit for people who are caregivers to someone with a disability
Credit for donations to charitable organizations or political parties
Some other non-refundable tax credits include tuition, medical expenses, Employment Insurance and Canada Pension Plan, interest paid on student loans, and adoption expenses. Most territories and provinces also have tax credits to reduce the territorial and provincial tax owing.
Refundable tax credits
Refundable tax credits are paid to anyone who qualifies for them, whether they had income or not. Refundable tax credits are also used to reduce the amount you owe first but unlike non-refundable tax credits, any remaining refundable tax credit is, well, refunded to you. Some common refundable tax credits include the Canada Workers’ Benefit and Canada Training Credit.
Tax deductions
Tax deductions don’t work as many people suppose (or hope). Instead of reducing the amount of taxes you need to pay, a tax deduction actually reduces the income you are taxed on, which can put you in a lower tax bracket and thus reduce the amount of taxes you will owe. Even if it doesn't move you into a lower top tax bracket, that amount of income is tax-free for that year, so you don't pay tax on it - meaning you owe less tax overall.
The most common tax deductions are:
Pension Adjustment. You get credit for any pension contributions made in the calendar year on your behalf. Your employer will list the Pension Adjustment amount in box 52 on your T4 slip that lists your income and income tax deducted for the year.
Union and professional dues
Child care expenses
Registered Retirement Savings Plan (RRSP) contributions up to the maximum allowable amount per year. Your financial institution will provide you with a contribution receipt, and you can find out how much RRSP contribution room you have by looking on your Notice of Assessment (the summary form that you receive after you have filed your previous year’s taxes), by looking on your CRA My Account or by calling CRA at 1-800-959-8281. You can also learn more about RRSP contribution limits.
Help, I can’t pay my full tax amount!
If you owe income taxes that you can’t pay all at once, the Canada Revenue Agency will work with you on a payment plan. The downside of such a plan is you will be charged interest on any balance you still owe. The upside is you won’t be in legal trouble. Because if you owe income tax and don’t pay or make an attempt to work out a payment plan, CRA can seize any benefits you may be eligible for, and they may take you to court and seize the contents of your bank account. Here's more information about potential consequences for non-payment of taxes.
