Key takeaways
- Canada taxes income in brackets: each rate applies only to the part of income inside that bracket
- The 2026 federal rates are 14%, 20.5%, 26%, 29% and 33%
- Your combined marginal rate adds the federal and provincial rates, plus any surtax
- A raise never lowers your take-home pay: only the extra dollars are taxed at the higher rate
- Your average tax rate is always lower than your marginal rate
What is a marginal tax rate?
Canada uses progressive tax brackets. Income in the first bracket is taxed at the lowest rate. Only the income above each threshold is taxed at the next rate. Your marginal rate is the combined federal and provincial rate on your last dollar of income.
Your average rate is your total income tax divided by your income. It is always lower, because your first dollars are taxed at low rates or not at all. The basic personal amount means most people pay no income tax on roughly their first $12,000 to $22,000, depending on the province.
Moving into a higher bracket never reduces your take-home pay. If a raise moves you from 20.5% to 26% federally, only the dollars above the threshold are taxed at 26%.
2026 federal tax brackets
As of October 2026, CRA lists these federal rates for the 2026 tax year. The lowest rate fell to 14% for 2026.
| Taxable income | Federal rate |
|---|---|
| $58,523 or less | 14% |
| $58,523 to $117,045 | 20.5% |
| $117,045 to $181,440 | 26% |
| $181,440 to $258,482 | 29% |
| Over $258,482 | 33% |
The federal basic personal amount is $16,452 in 2026. It shrinks to $14,829 for net incomes between $181,440 and $258,482.
2026 provincial and territorial brackets and basic personal amounts
Each province and territory adds its own tax. These are the 2026 lowest and highest rates, and the basic personal amount (BPA) each one uses. The calculator uses every bracket.
| Province or territory | Lowest rate | Top rate (starts at) | Basic personal amount |
|---|---|---|---|
| Alberta | 8% | 15% ($370,220) | $22,769 |
| British Columbia | 5.6% | 20.5% ($265,545) | $13,216 |
| Manitoba | 10.8% | 17.4% ($101,200) | $15,780 |
| New Brunswick | 9.4% | 19.5% ($193,861) | $13,664 |
| Newfoundland and Labrador | 8.7% | 21.8% ($1,141,275) | $11,188 |
| Nova Scotia | 8.79% | 21% ($157,124) | $11,932 |
| Northwest Territories | 5.9% | 14.05% ($172,346) | $18,198 |
| Nunavut | 4% | 11.5% ($181,439) | $19,659 |
| Ontario | 5.05% | 13.16% ($220,000) | $12,989 |
| Prince Edward Island | 9.5% | 20% ($200,000) | $15,000 |
| Quebec | 14% | 25.75% ($132,245) | $18,952 |
| Saskatchewan | 10.5% | 14.5% ($155,805) | $20,381 |
| Yukon | 6.4% | 15% ($500,000) | Same as federal |
B.C. raised its lowest rate from 5.06% to 5.6% for 2026 in its 2026 budget. Manitoba’s basic personal amount phases out for net income between $200,000 and $400,000.
Ontario surtax, Quebec abatement and other special rules
- Ontario surtax: if your Ontario tax is over $5,818, you pay 20% extra on the part above that. Above $7,446 you pay a further 36%. This is why Ontario marginal rates jump at around $100,000 of income.
- Ontario Health Premium: up to $900 a year, charged on taxable income over $20,000. In some income ranges it raises the marginal rate by 6 or 25 points for a short stretch.
- Quebec: residents file a separate Quebec return. Federal tax is reduced by the 16.5% Quebec abatement, so the federal rates above are lower in practice for Quebec residents.
- Low-income reductions in Ontario are included. Smaller credits in other provinces (for example the B.C. tax reduction) are not, so very low incomes may show slightly more tax than you will pay.
Worked example
Amira lives in Ontario and earns $100,000 of taxable income in 2026. Her income is in the 20.5% federal bracket and the 9.15% Ontario bracket. Her Ontario tax is above the surtax threshold, so the Ontario rate is multiplied by 1.2. Her combined marginal rate is about 31.5%: on a $1,000 raise she keeps about $685.
Her average rate is about 21.5%, because most of her income is taxed at lower rates.
Newcomers: your first year
In the year you arrive, Canada taxes your world income from the day you became a resident. Credits such as the basic personal amount may be reduced for the part of the year you were not resident. Use our part-year tax estimator for your first year, and our tax residency checker if you are not sure when your residency started.
Knowing your marginal rate helps you decide whether an RRSP contribution is worth it, and to compare the RRSP and TFSA. To see your take-home pay, use the net pay calculator.
Common questions
What is the difference between marginal and average tax rate?
Can a raise put me in a higher bracket and lower my pay?
Does this include CPP and EI?
Are capital gains and dividends taxed at the same rate?
Which income do I enter?
Sources
- CRA: 2026 tax rates and income brackets
- Revenu Québec: Income tax rates
- Government of B.C.: Personal income tax rates
- CRA: T4127 Payroll Deductions Formulas, 122nd edition (January 1, 2026)
- KPMG: Federal and provincial/territorial non-refundable tax credit rates and amounts for 2026
- Revenu Québec: Principal changes for 2026