9.2.4 Tax brackets and rates

Once you have identified what your income is, you need to know what percentage you'll pay as income tax. People with a lower income pay a lower tax rate than people with a higher income. This is known as a graduated income tax system. 

Federal income tax

Your income falls into one of four income tax brackets (or segments). The tax bracket is based on your taxable income—that is, your total income minus allowable deductions and exemptions, as discussed in the section titled Reducing your taxes.

Each bracket pays a different rate of tax, as the table below shows:

Refer to Step 5 of Canada Revenue Agency Income Tax and Benefit Return for Non-Residents and Deemed Residents of Canada. How would your income fit the calculations?

Example: If your taxable income was $55,000 in 2023, you would calculate your federal tax as follows:

• Pay 15% on the amount up to $53,359, or $8,003.85
• Pay 20.5% on the amount between $53,359 to $106,717, or $336.41
• Total federal tax payable: $8,340.26.

This is how the calculation looks at Step 5 of Canada Revenue Agency fillable/saveable Income Tax and Benefit Return for Non-Residents and Deemed Residents of Canada.

On $55,000 taxable income, the average federal tax rate is 15.16 percent—that's your total income divided by the total tax you pay:

• Average tax rate = Total taxes paid / Total taxable income

However, your marginal federal tax rate is 20.5 percent—that's the tax rate you pay on anything you earn beyond your current earnings. It applies until you make more than $106,717, when your marginal rate rises to 26 percent. The marginal federal tax rate is 26 percent until you make more than $165,430, when your marginal rate rises to 29%. After $235,675, your marginal rate is 33 percent.

Quebec income tax

Each province and territory also charges income tax in addition to the federal income tax. Their rates and tax brackets vary.

The chart below shows Quebec's tax rates for 2023.

Refer to Work Chart 401 of Revenu Québec’s TP-1.D.GR-V document (PDF). How would your income fit the calculations?

The tax brackets and rates can change in every provincial budget. For details, go to the Revenu Québec information on income tax rates. For details on current federal rates, go to Canada Revenue Agency's information on All Rates.