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Understanding the Tables of Personal Income Tax Rates
In Canada, as taxable income increases, the tax rate increases as well. There are 5 different tax brackets federally, and each province has their own tax brackets. Your income in the first tax bracket is taxed at the lowest rate, in the second tax bracket is taxed at the next higher rate, etc. See the example near the bottom of the page.
Our tables of marginal personal income tax rates show the combined federal plus provincial/territorial marginal tax rate for 4 different types of income - the 2 types of Canadian dividends, capital gains, and all other income. The other income column shows the actual tax rates for each tax bracket, but does apply the effects of the federal, Yukon, and Nova Scotia enhancements to the basic personal amounts. The marginal tax rate as indicated in the table is the tax rate that will be applied to the next dollar earned, if there are no tax credits other than the basic personal amount, and there is no age amount clawback or Old Age Security pension clawback.
Other income includes income from employment, self-employment, interest from Canadian or foreign sources, foreign dividend income, etc.
Marginal Tax Rates Capital Gains & Canadian Dividends
The marginal tax rates on capital gains and Canadian dividend income are lower than on other types of income, because:
 | only 50% of capital gains were included in taxable income, for capital gains realized prior to June 25, 2024. The first $250,000 of capital gains realized on or after June 25, 2024 are included in income at a rate of 50%, and any excess over $250,000 is included in income at a rate of 66 2/3% |
| The marginal tax rate shows the rate on the actual amount of capital gains. |
| Canadian dividends eligible for the dividend tax credit - 138% of these dividends are included in taxable income for 2012 and later years, but a dividend tax credit for eligible dividends is deducted from taxes payable. |
| Canadian non-eligible dividends (aka regular dividends, or small business dividends) - 115% of these dividends are included in income in 2019 and later years. A non-eligible dividend tax credit is deducted from taxes payable. |
See the Dividend Tax Credit page for more information.
Capital Gains & Dividend Rates in the Tax Rate Tables
In our tables, the marginal tax rates for capital gains and dividends at any income level, for example $60,000, are the marginal rates on the next dollar of actual capital gains or actual dividend income, if the taxpayer has $60,000 of taxable income from sources other than capital gains or Canadian dividends. Thus, the negative marginal tax rates for eligible dividends for lower tax brackets are the rates that would apply to the next dollar of actual dividend income received. However, the dividend tax credit is not refundable.
Example: the combined federal/Ontario marginal tax rate for a person who has $72,000 of "other income" in 2023 would be, for the next dollar earned:
| 29.65% for income such as employment, self-employment, interest or foreign dividends |
| 14.83% for capital gains |
| 6.39% for eligible Canadian dividends |
| 20.28% for Canadian non-eligible dividends |
Note that the marginal tax rates in the tables only apply when there are no tax credits or additional charges (such as Ontario Health Premium) that would distort the rate.
Marginal Tax Rate vs Average (Effective) Tax Rate
Our Detailed Canadian Tax and RRSP Savings Calculator displays an average tax rate based on "adjusted taxable income", which excludes the dividend gross-up (see dividend tax credit page) and includes 100% of capital gains.
In the Tax Calculator, the marginal tax rate can also be shown, based on the RRSP savings line. The marginal tax rates in the tax tables do not include:
| low income tax reductions that are reduced as income increases |
| any tax credits besides the basic personal amount |
| health or other premiums, such as the Ontario Health Premium, which can increase marginal tax rates by up to 25% |
To determine your actual marginal tax rate, enter your income, deductions and tax credits into the tax calculator, put your actual RRSP deduction into "Other deductions", and enter $10 in the RRSP deduction field. The % tax savings is your marginal tax rate.
Trying to Estimate Your Tax From the Tax Tables?
If your income doesn't include employment income or Canadian dividends, and you have no tax credits other than the basic personal amount, you could estimate your taxes using our tax tables. You would have to include only the taxable portion of capital gains in your taxable income. Here is a sample calculation for an Ontario resident with $75,000 of taxable income in 2020 (not enough to trigger surtax):
| Tax Calculated on | Taxable Amount |
Tax Rate |
Tax | |
| First | $44,740 | $44,740 | 20.05% | $8,970.37 |
| up to | 48,535 | 3,795 | 24.15% | 916.49 |
| up to | 75,000 | 26,465 | 29.65% | 7,846.87 |
| less ON personal amount | -10,783 | 5.05% | -544.54 | |
| less Fed personal amount | -13,229 | 15.00% | -1,984.35 | |
| Total Fed/ON tax | $15,204.84 | |||
The income tax on employment income would be less, because there would be tax credits for EI premiums and CPP contributions. At lower levels of taxable income from employment, there would also be a deduction for the Canada Workers Benefit (CWB).
For Quebec taxpayers, the calculation would have to include an adjustment to the federal personal amount, because the 16.5% federal tax abatement (reduction) is applied to the net federal tax payable after deducting the personal amount tax credit. Thus, the federal personal amount tax credit would be reduced by 16.5%, or $292 in 2020.
TaxTip: Use our Tax Calculators to estimate your taxes!
Revised: September 20, 2024