Canada’s Income Tax Brackets- The tax system is divided into federal and provincial or territorial brackets, which can significantly vary depending on where you live. Understanding the federal tax brackets, as well as those specific to your province or territory, can help you estimate your total tax liability for the year.
With proper planning, such as contributing to tax-saving accounts like RRSPs or donating to charitable causes, you can potentially lower your taxable income, reduce your tax bill, and better prepare for the upcoming tax season. This guide will walk you through Canada’s tax brackets for 2025, explain how they work, and provide strategies to manage your taxes efficiently.
Canada’s Income Tax Brackets 2025
As 2025 draws to a close, it’s essential for Canadian taxpayers to understand the income tax brackets that will influence their tax obligations. Canada’s tax system is progressive, meaning that as your income increases, the rate at which you are taxed also increases, but only on the portion of income that falls within each specific bracket.
This system helps ensure that those with higher earnings contribute more, while those with lower earnings pay less. However, both federal and provincial/territorial governments impose their own income tax rates, making the overall tax burden different depending on where you live.
Canada’s Income Tax Brackets 2025 Overviews
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Federal Income Tax Brackets for 2025
The federal government of Canada sets five tax brackets for 2025, ranging from 15% to 33%. These brackets apply to different income thresholds, ensuring that individuals with higher earnings pay a higher rate of tax on their income beyond certain limits. The first tax bracket applies to incomes up to $55,867, taxed at 15%. Income between $55,867 and $111,733 is taxed at 20.5%, followed by 26% for incomes between $111,733 and $173,205. The next bracket applies to incomes between $173,205 and $246,752, which are taxed at 29%, and any income over $246,752 is taxed at the highest rate of 33%.
Example of Federal Tax Calculation
If you earn $60,000 in 2025, your federal tax calculation would be as follows:
- The first $55,867is taxed at 15%, resulting in $8,380.05 in taxes.
- The remaining $4,133(which is the difference between your total income and the first bracket’s maximum) is taxed at 20.5%, resulting in an additional $848.17.
- Therefore, your total federal tax owed would be $9,228.22.
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Provincial and Territorial Tax Brackets in Canada
In addition to federal taxes, each province and territory in Canada has its own tax brackets. This means that the overall tax burden can vary depending on where you live. Provinces such as Alberta and British Columbia have different rates compared to places like Quebec, which has one of the highest provincial tax rates.
Alberta Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $148,269 | 10% | $14,826.90 | $14,826.90 |
| $148,269 to $177,922 | 12% | $3,558.36 | $18,385.26 |
| $177,922 to $237,230 | 13% | $7,710.04 | $26,095.30 |
| $237,230 to $355,845 | 14% | $16,606.10 | $42,701.40 |
| Over $355,845 | 15% | Not applicable | Depends on income level |
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British Columbia Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $47,937 | 5.06% | $2,425.61 | $2,425.61 |
| $47,937 to $95,875 | 7.7% | $3,691.23 | $6,116.84 |
| $95,875 to $110,076 | 10.5% | $1,491.10 | $7,607.94 |
| $110,076 to $133,664 | 12.29% | $2,898.96 | $10,506.90 |
| $133,664 to $181,232 | 14.7% | $6,992.49 | $17,499.39 |
| $181,232 to $252,752 | 16.8% | $12,015.36 | $29,514.75 |
| Over $252,752 | 20.5% | Not applicable | Depends on income level |
Manitoba Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $47,000 | 10.8% | $5,076.00 | $5,076.00 |
| $47,000 to $100,000 | 12.75% | $6,757.50 | $11,833.50 |
| Over $100,000 | 17.4% | Not applicable | Depends on income level |
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New Brunswick Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $49,958 | 9.4% | $4,696.05 | $4,696.05 |
| $49,958 to $99,916 | 14% | $6,994.12 | $11,690.17 |
| $99,916 to $185,064 | 16% | $13,623.68 | $25,313.85 |
| Over $185,064 | 19.5% | Not applicable | Depends on income level |
Newfoundland and Labrador Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $43,198 | 8.7% | $3,758.22 | $3,758.22 |
| $43,198 to $86,395 | 14.5% | $6,263.71 | $10,021.93 |
| $86,395 to $154,244 | 15.8% | $10,516.59 | $20,538.52 |
| $154,244 to $215,943 | 17.8% | $10,982.22 | $31,520.74 |
| $215,943 to $275,870 | 19.8% | $11,865.54 | $43,386.28 |
| $275,870 to $551,739 | 20.8% | $57,380.75 | $100,767.03 |
| Over $551,739 | 21.8% | Not applicable | Depends on income level |
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Northwest Territories Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $50,597 | 5.9% | $2,985.23 | $2,985.23 |
| $50,597 to $101,198 | 8.6% | $4,351.68 | $7,336.91 |
| $101,198 to $164,525 | 12.2% | $7,725.89 | $15,062.80 |
| Over $164,525 | 14.05% | Not applicable | Depends on income level |
Nova Scotia Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $29,590 | 8.79% | $2,600.96 | $2,600.96 |
| $29,590 to $59,180 | 14.95% | $4,423.70 | $7,024.66 |
| $59,180 to $93,000 | 16.67% | $5,637.79 | $12,662.45 |
| $93,000 to $150,000 | 17.5% | $9,975.00 | $22,637.45 |
| Over $150,000 | 21% | Not applicable | Depends on income level |
Nunavut Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $53,268 | 4% | $2,130.72 | $2,130.72 |
| $53,268 to $106,537 | 7% | $3,728.83 | $5,859.05 |
| $106,537 to $173,205 | 9% | $6,000.12 | $11,859.17 |
| Over $173,205 | 11.5% | Not applicable | Depends on income level |
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Ontario Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $51,446 | 5.05% | $2,598.02 | $2,598.02 |
| $51,446 to $102,894 | 9.15% | $4,707.29 | $7,305.31 |
| $102,894 to $150,000 | 11.16% | $5,257.02 | $12,562.33 |
| $150,000 to $220,000 | 12.16% | $8,512.00 | $21,074.33 |
| Over $220,000 | 13.16% | Not applicable | Depends on income level |
Prince Edward Island Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $32,656 | 9.65% | $3,151.30 | $3,151.30 |
| $32,656 to $64,313 | 13.63% | $4,314.84 | $7,466.14 |
| $64,313 to $105,000 | 16.55% | $6,733.69 | $14,199.83 |
| $105,000 to $140,000 | 18% | $6,300.00 | $20,499.83 |
| Over $140,000 | 18.75% | Not applicable | Depends on income level |
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Quebec Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $51,780 | 14% | $7,259.20 | $7,259.20 |
| $51,780 to $103,545 | 19% | $9,835.35 | $17,094.55 |
| $103,545 to $126,000 | 24% | $5,389.20 | $22,483.75 |
| Over $126,000 | 25.75% | Not applicable | Depends on income level |
Saskatchewan Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $52,057 | 10.5% | $5,220.60 | $5,220.60 |
| $52,057 to $148,734 | 12.5% | $12,084.62 | $17,305.22 |
| Over $148,734 | 14.5% | Not applicable | Depends on income level |
Yukon Tax Brackets
| Annual Income (Taxable) | Tax Rate (%) | Maximum Tax Owed in Bracket | Cumulative Maximum Tax |
| Up to $55,867 | 6.4% | $3,575.48 | $3,575.48 |
| $55,867 to $111,733 | 9% | $5,027.94 | $8,603.42 |
| $111,733 to $173,205 | 10.9% | $6,700.48 | $15,303.90 |
| $173,205 to $500,000 | 12.8% | $41,829.76 | $57,133.66 |
| Over $500,000 | 15% | Not applicable | Depends on income level |
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First Home Savings Account (FHSA)
The First Home Savings Account (FHSA) is a newer savings option designed to help first-time homebuyers save for a home purchase while receiving tax benefits. Similar to RRSPs, contributions to an FHSA are tax-deductible, and withdrawals made for a home purchase are non-taxable. This provides both short-term tax benefits and long-term savings.
Tax Credits and Deductions
Canada offers a wide array of tax credits and deductions that can help reduce your taxable income. For instance, the basic personal amount allows you to earn a certain amount without paying federal tax. In 2025, this amount is set at $15,705. Other deductions, such as for medical expenses, childcare, or education, can further reduce your tax burden.
Surtaxes in Certain Provinces
Some provinces, like Ontario and Prince Edward Island, impose a surtax on top of regular income tax. These surtaxes are typically applied if the basic tax liability exceeds a certain threshold. In Ontario, for example, a surtax applies if the provincial tax exceeds $11,000.
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Conclusion
Understanding Canada’s income tax system, with its federal and provincial tax brackets, is crucial for proper financial planning. By knowing how the brackets work, how to calculate your tax liability, and which strategies can reduce your taxable income, you can better manage your finances and minimize your overall tax burden. Always consult a tax professional to ensure you’re maximizing your potential deductions and credits and staying compliant with tax regulations.
Canada’s Income Tax Brackets FAQ’S
What are federal income tax brackets in Canada for 2025?
The federal tax brackets range from 15% to 33%, depending on your taxable income, with higher rates applying to higher income ranges.
Do provincial taxes apply in addition to federal taxes?
Yes, in addition to federal taxes, each province or territory in Canada has its own tax brackets and rates, which can significantly impact your overall tax bill.
What is the basic personal amount for 2025?
The basic personal amount for 2025 is $15,705, which means you can earn this amount without paying federal income tax.
Do all provinces have the same tax rates?
No, provincial tax rates vary significantly. For example, Alberta has a lower tax rate than Quebec, which has a higher tax rate for higher earners.
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