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Government of Canada taxes come down to a handful of things you actually pay: federal income tax, GST or the federal part of HST, and CPP and EI on your pay. Income tax is the big one. On an $85,000 salary in Ontario, $10,226.60 goes to Ottawa in income tax, another $5,324.46 to Ontario, and $5,769.52 to CPP and EI.
What taxes does the federal government charge you?
Income tax first. You report your income on a return, and Ottawa taxes it on a sliding scale. Then there’s sales tax: GST is 5% across the country, and the HST provinces charge one combined rate instead. Payroll contributions come next. CPP and EI aren’t called taxes, but they come off your pay the same way.
The CRA also collects provincial and territorial income tax for everyone except Quebec residents. That’s why you file one return in most of the country and see two lines of tax on it. Quebec has its own return with Revenu Quebec.
What are the federal income tax rates for 2026?
Five steps, and each rate applies only to the slice of income inside it. Nobody’s whole income jumps to a higher rate.
| Taxable income | Federal rate |
|---|---|
| Up to $58,523 | 14% |
| $58,523 to $117,045 | 20.5% |
| $117,045 to $181,440 | 26% |
| $181,440 to $258,482 | 29% |
| Over $258,482 | 33% |
Before any of that, the basic personal amount lets you earn a set amount with no federal tax. For 2026 it’s $16,452 at most, and it shrinks for the highest earners. Try the marginal tax rate calculator to see what your next dollar is taxed at, provincial tax included.
Where does an $85,000 salary go?
We ran it through the income tax calculator for Ontario. Federal tax is $10,226.60 and Ontario tax is $5,324.46, so Ottawa gets roughly 66% of the income tax. Add $5,769.52 of CPP and EI and you have $21,320.58 gone. That leaves $63,679.43.
Your own numbers will move if you have other credits or deductions. The calculator counts a short list of credits, listed on its page.
How do CPP, EI and GST fit in?
CPP is 5.95% of pay between $3,500 and $74,600, to a maximum of $4,230.45. A second tier of 4% on pay from $74,600 to $85,000 adds up to $416. EI is 1.63% of pay up to $68,900, to a maximum of $1,123.07. These are the 2026 figures outside Quebec, and the CPP calculator and EI calculator go into detail.
The GST and HST calculator handles the rest. GST is 5% in Alberta, BC, Manitoba, Saskatchewan, Quebec and the territories. HST is 13% in Ontario, 14% in Nova Scotia since April 1, 2025, and 15% in the other three Atlantic provinces that use it.
What about capital gains and other special cases?
On a capital gain, half counts as income. There was a plan to raise that to two thirds, but the Prime Minister’s release of 21 March 2025 cancelled it. We couldn’t find a CRA page that states the 2026 rate in one line, so treat 50% as our best reading rather than a quote. The capital gains tax calculator uses half.
Common mistakes
People compare gross pay to a bracket and panic, and that’s the wrong test. The bracket applies to taxable income, which is lower once you deduct things like an RRSP contribution or part of your CPP. Another slip is forgetting the province. The rates above are only Ottawa’s share, so your real top rate is higher, and depends on where you lived on December 31.
And don’t confuse withholding with the final bill. Your employer’s deductions are an estimate, and the return settles up. The tax credits calculator shows how deductions and credits change the result, federal only.
Where the numbers come from
Federal brackets and the GST and HST rates come from the CRA’s 2026 rate pages. CPP and EI figures come from the CRA’s payroll pages, and the basic personal amount from its indexation notice. The examples are from our own calculators. This site has no connection with the CRA or any government.
Frequently asked questions
What are the federal tax brackets for 2026?
They are 14% up to $58,523, 20.5% to $117,045, 26% to $181,440, 29% to $258,482 and 33% above that.
Does the CRA collect provincial income tax too?
Yes, for every province and territory except Quebec, which collects its own through Revenu Quebec.
What is the GST rate in 2026?
It's 5% in Alberta, BC, Manitoba, Saskatchewan, Quebec and the territories. Ontario's HST is 13%.
Is CPP a tax?
Not officially, but it comes off your pay like one. In 2026 it is 5.95% on pay from $3,500 to $74,600, up to $4,230.45.
Did the capital gains inclusion rate go up?
The proposed rise to two thirds was cancelled by the Prime Minister's release of 21 March 2025. We couldn't find a CRA page that states the 2026 rate, so 50% is our reading.
- How Canadian income tax works: brackets and credits
How federal and provincial Canadian income tax stack up, what marginal and average rates mean, and how credits and deductions change your bill
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.