Income Tax Calculator Canada 2026
Frequently asked questions
What is the difference between marginal and effective tax rate?
Your marginal tax rate is the tax rate applied to your last (highest) dollar of income. For example, if you earn $100,000, only the portion above the second-highest bracket threshold is taxed at the higher rate. The income below is taxed at lower rates. Your effective tax rate is your total tax divided by your total income, which gives a more accurate picture of your overall tax burden. The effective rate is always lower than the marginal rate in a progressive system.
Canada Revenue Agency · Canadian federal income tax rates and bracketsHow do RRSP contributions reduce my taxes?
RRSP contributions are deducted from your total income, directly reducing your taxable income. The tax savings equal your contribution multiplied by your marginal tax rate. For example, a $10,000 RRSP contribution at a 40% marginal rate saves $4,000 in tax. You can also carry forward unused RRSP deductions to a future year when you might be in a higher tax bracket, maximizing the benefit.
Canada Revenue Agency · RRSP deductions on your income tax and benefit return (Line 20800)What are the most commonly missed tax deductions and credits?
Frequently overlooked items include medical expenses above the threshold (including travel costs for medical treatment), the disability tax credit (DTC), tuition and education amounts carried forward from prior years, moving expenses when relocating for work or school, home office expenses for remote workers, the Canada employment amount, and charitable donations, which provide a higher credit rate on amounts above $200. Keeping thorough records throughout the year ensures you claim everything you're entitled to.
Canada Revenue Agency · All deductions, credits, and expenses on your tax returnHow does tax work differently in Quebec?
Quebec is the only province that collects its own income tax entirely separately from the federal government, so residents file two tax returns: a federal return with the CRA and a provincial return with Revenu Québec. Quebec has its own brackets, rates, deductions, and credits, some of which have no federal equivalent (like the Quebec Solidarity Tax Credit). The federal tax abatement reduces federal tax for Quebec residents by 16.5% to partially offset the higher provincial taxes.
Revenu Québec · Income tax returns and Quebec abatement for Quebec residentsWhat income sources are taxed differently than employment income?
Capital gains are taxed at a reduced inclusion rate, and eligible dividends from Canadian corporations receive a dividend tax credit that significantly reduces the effective tax rate. Interest income is fully taxable at your marginal rate with no preferential treatment, and rental income is taxable after deducting eligible expenses. TFSA withdrawals are completely tax-free, while RRSP and RRIF withdrawals are fully taxable as regular income.
Canada Revenue Agency · Types of income and how they are taxedHow does this calculator work?
Enter your employment income, investment income, and other sources of income, along with your province of residence and applicable deductions and credits. The calculator applies the current federal and provincial tax brackets, subtracts non-refundable credits like the basic personal amount and CPP/EI contributions, and shows your total tax payable, marginal tax rate, and effective (average) tax rate with the federal and provincial components broken out separately. You can model the impact of RRSP contributions, charitable donations, and other deductions on your taxable income and overall tax payable.