Lisa MacColl is a writer, investor and former compliance consultant in the group retirement and individual wealth management fields. Lisa has written about personal finance for 14 years and currently writes about investing and investment providers for Wealthsimple. Lisa's past work has been published in Canadian Money Saver, Advisor’s Edge, CBC, and CreditCards.ca. She was a nominee for the 2015 Oktoberfest Women of the Year, Professional Category. Lisa holds an M.A. and B.A. from the Wilfrid Laurier University.
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
15% on the first $53,358 of taxable income
20.5% on taxable income over $53,359 up to $106,717
26% on taxable income over $106,717 up to $165,430
29% on taxable income over $165,430 up to $235,675
33% on any taxable income over $235,675
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.
You should calculate your federal income tax first and your provincial or territorial rate second. Add the two together and, bam, you’ve got your “marginal tax rate,” the combined federal and provincial/territorial income taxes you pay on all sources of income at tax time.
If you want to reduce your tax bill, Wealthsimple has a number of financial products such as Registered Retirement Savings Plans (RRSPs) that can help you reduce the amount of income tax you pay.
Provincial/territorial tax bracket rates 2023
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 2023 (in addition to federal tax) according to the CRA:
|British Columbia||5.06% on the first $45,654 of taxable income|
|7.7% on taxable income over $45,654 up to $91,310|
|10.5% on taxable income over $91,310 up to $104,835|
|12.29% on taxable income over $104,835 up to $127,299|
|14.7% on taxable income over $127,299 up to $172,602|
|16.8% on taxable income over $172,602 up to $240,716|
|20.5% on taxable income over $240,716|
|Alberta||10% on the first $142,292 of taxable income|
|12% on taxable income over $142,292 up to $170,751|
|13% on taxable income over $170,751 up to $227,668|
|14% on taxable income over $227,668 up to $341,502|
|15% on taxable income over $341,502|
|Saskatchewan||10.5% on the first $49,720 of taxable income|
|12.5% on taxable income over $49,720 up to $142,058|
|14.5% on taxable income over $142,058|
|Manitoba||10.8% on the first $36,842 of taxable income|
|12.75% on taxable income over $36,842 up to $79,625|
|17.4% on taxable income over $79,625|
|Ontario||5.05% on the first $49,231 of taxable income|
|9.15% on taxable income over $49,231 up to $98,463|
|11.16% on taxable income over $98,463 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 $49,275 or less of taxable income|
|19% on taxable income more than $49,275 but not more than $98,540|
|24% on taxable income more than $98,540 but not more than $119,910|
|25.75% on taxable income more than $119,910|
|New Brunswick||9.4% on the first $47,715 or less of taxable income|
|14% on taxable income over $47,715 up to $95,431|
|16% on taxable income over $95,431 up to $176,756|
|19.5% on taxable income between $145,955 and $166,280|
|Nova Scotia||8.79% on taxable income that is $29,590 or less|
|14.95% on taxable income over $29,590 up to $59,180|
|16.67% on taxable income over $59,180 up to $93,000|
|17.5% on taxable income over $93,000 up to $150,000|
|21% on taxable income over $150,000|
|Prince Edward Island||9.8% on the first $31,984 of taxable income|
|13.8% on taxable income between $31,984 and $63,969|
|16.7% on taxable income over $63,969|
|Newfoundland and Labrador||8.7% on the first $41,457 or less of taxable income|
|14.5% on taxable income over $41,457 up to $82,913|
|15.8% on taxable income over $82,913 up to $148,027|
|17.8% on taxable income over $148,027 up to $207,239|
|19.8% on taxable income over $207,239 up to $264,750|
|20.8% on taxable income over $264,750 up to $529,500|
|21.3% on taxable income over $529,500 up to $1,059,000|
|21.8% on taxable income over $1,059,000|
|Nunavut||4% on the first $50,877 or less of taxable income|
|7% on taxable income over $50,877 up to $101,754|
|9% on taxable income over $101,754 up to $165,429|
|11.5% on taxable income over $165,429|
|Yukon||6.4% on the first $53,359 or less of taxable income|
|9% on taxable income over $53,359 up to $106,717|
|10.9% on taxable income over $106,717 up to $165,430|
|12.8% on taxable income over $165,430 up to $500,000|
|15% on taxable income over $500,000|
|Northwest Territories||5.9% on the first $48,326 or less of taxable income|
|8.6% on taxable income over $48,326 up to $96,655|
|12.2% on taxable income over $96,655 up to $157,139|
|14.05% on taxable income over $157,139|
Remember: Your marginal tax rate is the total of both federal and provincial/territorial taxes on income.
How to do a tax calculation: an example
For our example, let’s use Naveen in British Columbia. Naveen has been contributing to a Wealthsimple RRSP to reduce his taxable income (way to go, Naveen!). After his RRSP contribution and other tax deductions and tax credits, he has a taxable income of $60,000. Here’s how he would figure out his taxes:
Calculating the federal tax bill Based on the updated 2023 federal tax rates (see that section above), the first $53,359 of his income is taxed at 15%, which works out to $8,003.85. Taking his total income ($60,000) and subtracting the first income tax bracket ($53,359), he has $6,641 of unaccounted-for income remaining. That amount will be taxed at a higher rate of 20.5%, which is $1,361.41. This means the total he owes in federal tax is $8,003.85 + $1,361.41, so $9,365.26.
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 $45,654 of income will be taxed at 5.06%, which equals $2,310.09. The remaining $14,346 of his income (found by taking his $60,000 total income minus the $45,654 he already calculated taxes on) will be taxed at 7.7%, which works out to $1,104.64. So, to find his total provincial tax, he adds $2,310.09 + $1,104.64 to get $3,414.73.
Calculating the total tax bill Naveen's combined federal and provincial taxes are $9,365.26 + $3,414.73, which adds up to $12,779.99. 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.
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: nonrefundable and refundable.
Nonrefundable tax credits
A nonrefundable tax credit reduces the amount of money you owe. In order to claim a nonrefundable tax credit, you must actually owe taxes — in other words, you must have earned enough income to owe income tax. Nonrefundable 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 nonrefundable tax credits for $2,700, your taxes will be reduced to zero (sweet!), but you will not receive the extra $200 (oh well).
Some nonrefundable tax credits include:
Personal exemption amount (anyone who owes tax is entitled to claim this exemption)
Credit for taxpayers over age 65
Credit for taxpayers with children
Credit for people receiving a pension
Credit for people with a certified disability
Credit for people who are caregivers to someone with a disability
Some other nonrefundable tax credits include tuition, medical expenses, Employment Insurance and Canada Pension Plans, interest paid on student loans, and adoption expenses. Most territories and provinces 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 nonrefundable tax credits, any remaining refundable tax credit is, well, refunded to you. Some common refundable tax credits include the Canada Workers’ Benefit, Canada Training Credit, and the Eligible Educator School Supply credit.
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.
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, which lists your income and income tax deducted for the year.
Union and professional dues
Child care expenses
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 at 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 the 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 CRA 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, the 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 the potential consequences of nonpayment of taxes. Unless stripes look especially good on you, with taxes, it’s definitely better to be safe than sorry.
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