Canadian Federal and Provincial Income Tax Rates for 2025
What you actually owe depends on where you live. Here are the current rates for every province and territory.
Canada uses a progressive tax system, you pay a lower rate on the first portion of your income and higher rates as income increases. Both the federal government and your province or territory charge separate income tax, and both apply their own rate schedules. The total tax you pay is the combination of both. This page shows the 2025 federal and provincial rates so you understand which bracket your income falls into and what each additional dollar of income, or each dollar of deduction, is actually worth to you.
How the Canadian Income Tax System Works
Canada taxes income in layers called brackets. You do not pay the top rate on all your income, you pay the lowest rate on the first portion, then progressively higher rates as income increases into each bracket. This means your effective tax rate, the actual percentage of your total income paid in tax, is always lower than your marginal rate.
Your marginal rate is the rate that applies to the next dollar you earn, or equivalently the rate at which a deduction or RRSP contribution saves you tax. Federal tax is calculated on your total income using the federal brackets, and provincial tax is calculated separately using your province's brackets. The two are added together to arrive at your total income tax before credits. Our accountants and our tax software apply these brackets automatically when handling your T1 personal tax filing.
2025 Federal Income Tax Brackets and Rates
The following federal rates apply to all Canadian residents regardless of province.
| Taxable Income Range | Federal Tax Rate |
|---|---|
| $0 to $57,375 | 15% |
| $57,376 to $114,750 | 20.5% |
| $114,751 to $158,519 | 26% |
| $158,520 to $220,000 | 29% |
| Over $220,000 | 33% |
Note: The Basic Personal Amount reduces federal tax by the equivalent of the lowest rate applied to $16,129, effectively making the first $16,129 of income tax-free federally for most Canadians.
2025 Provincial and Territorial Income Tax Rates
Provincial rates are added on top of federal rates. The combined federal and provincial rate at your income level is your total marginal rate.
| Province or Territory | Lowest Rate | Top Rate | Top Rate Threshold (approx.) |
|---|---|---|---|
| Alberta | 10% | 15% | Over $355,845 |
| British Columbia | 5.06% | 20.5% | Over $240,716 |
| Manitoba | 10.8% | 17.4% | Over $100,000 |
| New Brunswick | 9.4% | 19.5% | Over $185,064 |
| Newfoundland and Labrador | 8.7% | 21.8% | Over $1,000,000 |
| Northwest Territories | 5.9% | 14.05% | Over $164,525 |
| Nova Scotia | 8.79% | 21% | Over $150,000 |
| Nunavut | 4% | 11.5% | Over $173,205 |
| Ontario | 5.05% | 13.16% | Over $220,000 |
| Prince Edward Island | 9.65% | 18.75% | Over $140,000 |
| Quebec | 14% | 25.75% | Over $126,000 |
| Saskatchewan | 10.5% | 14.5% | Over $142,058 |
| Yukon | 6.4% | 15% | Over $500,000 |
Note: Rates shown are the provincial or territorial rates only. Your combined marginal rate is the federal rate for your bracket plus your provincial rate for your bracket.
What Is a Marginal Tax Rate vs an Effective Tax Rate?
Your marginal rate is the rate that applies to the next dollar you earn. It is the number most people quote when they say they are in the 33 percent bracket. But it does not mean you pay 33 percent on all your income, only on the portion that falls in the top bracket. Your effective tax rate is the total tax you pay divided by your total income. It is always lower than your marginal rate because the lower brackets apply to the first portions of your income.
A Canadian earning $120,000 federally does not pay 26 percent on all $120,000. They pay 15 percent on the first $57,375, 20.5 percent on the next $57,374, and 26 percent on the remaining $5,251. Understanding the difference between these two rates is critical for evaluating the value of an RRSP contribution, a business deduction, or any other tax planning decision. You can book a consultation with T.U.A to review your specific tax planning needs.
How Provincial Tax Affects Your Total Tax Rate
The combined federal and provincial marginal tax rate is the true cost of earning each additional dollar of income. In Ontario at $100,000 of income, the federal rate is 20.5 percent and the Ontario rate is 9.15 percent, for a combined marginal rate of approximately 29.65 percent. In Quebec at the same income level, the federal rate is 20.5 percent and the Quebec rate is 20 percent, for a combined marginal rate of approximately 40.5 percent.
The province you live in on December 31 of the tax year determines which provincial rates apply to your full year's income, not where you worked or where your employer is based. Provinces with low or no provincial tax like Alberta provide a significant advantage for high-income earners.
What These Rates Mean for Your RRSP Contribution
Every dollar you contribute to an RRSP saves you tax at your marginal rate, the combined federal and provincial rate on your top dollar of income. A Canadian in Ontario earning $130,000 has a combined marginal rate of approximately 43.41 percent, meaning a $10,000 RRSP contribution saves approximately $4,341 in tax.
The same contribution in Alberta at the same income level saves approximately 40.29 percent because of Alberta's lower provincial rates. This is why the value of an RRSP contribution varies significantly by province and why tax planning decisions should always account for provincial rates, not just federal rates. Our accountants and our tax software apply your RRSP contributions at the correct combined rate to calculate your actual tax savings.
Know Your Rate. Reduce What You Owe.
Understanding your marginal rate is step one. Claiming every eligible deduction and credit is step two. Our accountants and our tax software handle step two for you.