Updated Checked by the Tax-Services.ca editorial team How we check
Personal tax in Canada is charged in steps, so only the part of your income inside each step pays that step’s rate. For 2026 the federal rate starts at 14% and reaches 33% above $258,482. An Ontario employee earning $60,000 pays $8,320.50 in federal and Ontario income tax, about 13.9% of income, before CPP and EI.
What are the federal rates for 2026?
Here are the CRA’s federal steps for income earned in 2026. They apply to the return you file in 2027.
| 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% |
Provincial or territorial income tax rates apply in addition to federal income tax rates.
Current year tax rates and income brackets (2026), canada.ca
So your province adds its own tax on top, and Ontario has a surtax and a health premium as well. That’s why the total is never just the federal rate.
How do the steps work on a real income?
Say Dana has $70,000 of taxable income. The first $58,523 is taxed at 14%, which is $8,193.22. The other $11,477 falls in the next step and is taxed at 20.5%, which is about $2,352.79. Add them and the federal tax is roughly $10,546 before any credits.
Notice what didn’t happen. Crossing $58,523 did not make all of Dana’s income 20.5% income. A raise can’t push you into a smaller paycheque, no matter what your uncle told you at the barbecue.
How much personal tax do you pay on $60,000 and $120,000?
Take two Ontario employees, worked through our income tax calculator. It uses the basic personal amount, the Canada employment amount and the CPP and EI credits.
| $60,000 | $120,000 | |
|---|---|---|
| Federal tax | $5,338.30 | $17,502.14 |
| Ontario tax | $2,982.20 | $9,385.57 |
| Total income tax | $8,320.50 | $26,887.71 |
| CPP and EI | $4,339.75 | $5,769.52 |
| Average tax rate | 13.9% | 22.4% |
Double the pay and the tax more than triples, which is the steps at work: the second person has more income sitting in the 20.5% and 26% ranges, and Ontario’s steps stack on top. Notice, too, that CPP and EI barely rise for the second person, because both stop at a yearly maximum.
Do deductions help more than credits?
They usually do, at least per dollar. A deduction shrinks the income the steps are applied to. Put a $5,000 deduction on the $60,000 case and the tax falls to $7,103.72, a saving of $1,216.78, or about 24 cents on the dollar. An RRSP contribution is the common one, and the RRSP calculator shows how it grows.
Credits work differently. They come off the tax itself, and the federal credit rate in our data is 14%, so a $1,000 credit amount saves $140 federally while a $1,000 deduction can save more if you’re in a higher step, and that’s the reason a deduction tends to win for higher earners. The tax credits calculator covers federal credits only. It won’t show provincial ones.
When do you file and pay for the 2025 return?
Most people had until April 30, 2026 to file and pay. If you or your spouse or common-law partner were self-employed, the filing date was June 15, 2026, but any tax owed was still due April 30. The last day for RRSP contributions counted on the 2025 return was March 2, 2026.
What about the 2026 return? The CRA hasn’t published those dates. So check its important dates page in early 2027 and don’t plan around April 30 by habit.
What does this simple picture leave out?
Quite a bit. The calculator ignores refundable credits and benefits, and most claims beyond the basics. Capital gains, dividends and other income types are taxed differently. The capital gains inclusion rate is 50% in our tools for 2026, though we couldn’t find it stated on a CRA page, so treat that as an assumption. The proposed increase to two thirds was cancelled, according to the Prime Minister’s release of March 21, 2025.
Is your next dollar taxed more than the average shows? Yes, and the marginal tax rate calculator gives that figure. It can show a jump near $200,000 in Ontario because the Ontario Health Premium steps up there, so don’t read that one spot as your everyday rate.
Is the average rate or the marginal rate the one to watch?
Both, for different jobs. The average rate (total tax divided by income) tells you what share of the year’s pay went to tax, which is the number to use when you’re sizing up a budget. The marginal rate tells you what the next bonus or side gig will lose, which is what you want before you decide whether the overtime is worth the weekend.
One more habit. Keep your slips and your notice of assessment together each year, so a question from the CRA takes ten minutes to answer instead of an evening.
Where we got these figures
The federal rates and the filing dates come from Canada Revenue Agency pages, read on September 30, 2026. The Ontario figures and every worked example come from our calculators on 2026 data. We’re an independent site, and no government body is behind it.
Frequently asked questions
How is personal tax calculated?
In steps. Each slice of taxable income is taxed at its own rate, so only the part above a threshold pays the higher rate.
What are the 2026 federal rates?
14% up to $58,523, 20.5% to $117,045, 26% to $181,440, 29% to $258,482 and 33% above that, per the CRA.
When was the 2025 return due?
April 30, 2026 for most people. Self-employed people had until June 15, 2026 to file but still had to pay by April 30.
When is the 2026 return due?
The CRA hasn't published those dates yet. Check its important dates page before you rely on one.
Is a deduction worth more than a credit?
Usually, because a deduction lowers the income taxed at your top rate while a credit reduces tax at the lowest rate.
- 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