Canadian Income Tax Brackets

In Canada, income tax is calculated using a progressive system. That means the more you earn, the higher the rate you pay on the portion of income that falls into each bracket. You are not taxed the highest rate on your entire income. Only the income within that bracket gets taxed at that specific rate.

Let’s say you earn $60,000 in 2024. Here is how your federal income tax would break down:

• You pay 15% on the first $55,867, which equals $8,380.05
• Then you pay 20.5% on the amount over $55,867, which is $4,133, and that portion is taxed at 20.5%, which equals $847.27

So, your total federal income tax would be roughly $9,227.32

Even though you crossed into the second tax bracket, you only paid the higher rate on the income that exceeded the first bracket. The bulk of your income was still taxed at the lower rate.

The Canadian Federal Tax Brackets for 2024

Here’s how the federal tax system breaks down for individuals in 2024:

• 15% on the first $55,867
• 20.5% on the portion from $55,868 to $111,733
• 26% on the portion from $111,734 to $173,205
• 29% on the portion from $173,206 to $246,752
• 33% on anything over $246,752

Each portion of income falls into a range and is taxed accordingly. That is what keeps the system fair and progressive.

Don’t Forget, Provincial Tax Brackets Also Apply

On top of federal tax, each province and territory has its own set of tax brackets. They are also progressive, but the thresholds and rates vary widely.

For instance, Alberta has a flatter structure with fewer brackets. British Columbia has more brackets but with smaller jumps. Ontario sits somewhere in between. This means your total tax bill depends on where you live.

Know Your Bracket, Control Your Future

You don’t have to be an accountant to understand Canadian income tax brackets. You just need to know that your entire income is not taxed at one rate, and that your financial choices can help optimize where you land within the system.

When you know how the brackets work, you gain more control over your money. And that is worth paying attention to.

Located in Surrey (Cloverdale), British Columbia, since 1971, HWG, Chartered Professional Accountants proudly helps clients throughout the Lower Mainland and across Canada.

Our team of chartered professional accountants provides helpful business and personal tax services. Our continued growth proves the success of our client relationships.