It’s important to know that not all of your taxable income is taxed at the same rate.

Canadian income tax rates vary according to the amount of income you earn, and you pay different rates on different portions of your income. This is a marginal tax rate system.

Overview

Canada uses a progressive system which means low-income earners are taxed at a lower percentage than high-income earners. This means taxing the first dollars earned by all taxpayers at a lower rate, and then gradually raising the rate on earnings that exceed the minimum income limit.

The rates, usually called tax brackets, apply to income earned between predetermined minimum and maximum amounts.

These rates apply to taxable income, which is your gross income less any deductions you may be entitled to. All of the provinces also have their own tax brackets, which are not necessarily in-line with the federal ones. When making decisions, you should consider the rates of the province where you reside, as well. In addition the final amount of tax you pay will be after the tax credits you have are deducted from your initial tax calculation

In 2019, Canada’s Federal Income Tax Brackets are as follows:

15% on the first $47,630 of taxable income,plus

20.5% on the next $47,629 of taxable income (on the portion of taxable income over 47,630 up to $95,259),plus

26% on the next $52,408 of taxable income (on the portion of taxable income over $95,259 up to $147,667),plus

29% on the next $62,704 of taxable income (on the portion of taxable income over 147,667 up to $210,371), plus

33% of taxable income over $210,371

Alberta’ Tax Brackets are as follows :

10% on the first $131,220 of taxable income, + 12% on the next $26,244, + 13% on the next $52,488, + 14% on the next $104,976, + 15% on the amount over $314,928