Updated Checked by the Tax-Services.ca editorial team How we check
Your marginal tax rate is the share of your next dollar of income that goes to tax. In Ontario in 2026, someone earning $95,000 pays 29.6% on the next dollar of interest or rent, yet only 19.5% on average across all income. The calculator below finds your own marginal tax rate for five kinds of income in every province and territory.
What is the difference between a marginal and an average tax rate?
Divide your total tax by your total income and you get the average rate. The marginal rate is what one more dollar would cost you, and that is the number that decides whether a raise, a side job or an RRSP deduction is worth the trouble. Tax steps climb with income, so the rate on the next dollar usually sits above the average.
Behind the scenes the tool adds $1,000 of each income type on top of what you enter, then divides the extra tax by 1,000. The answer covers federal and provincial tax at the exact point where you stand. Try a $2,000 side job at a 29.6% marginal rate. It leaves you $1,408 after tax, and you can weigh that against the hours it takes.
Can a raise leave me with less take-home pay?
No, though plenty of people worry about it. Moving into a higher step does not tax your whole income at the new rate. Only the dollars inside the new step pay it, and everything below stays where it was. Federal tax for 2026 starts at 14% on the first $58,523 of taxable income and moves to 20.5% up to $117,045, with provincial tax added on top, as the CRA's 2026 tax rates and income brackets page shows. A raise on its own always leaves you ahead, just by less than the headline number suggests.
What does the next $1,000 cost in Ontario?
| Income type | At $60,000 | At $95,000 | At $150,000 |
|---|---|---|---|
| Extra pay from work | 28.1% | 29.6% | 43.4% |
| Interest or rent | 29.6% | 29.6% | 43.4% |
| Capital gains | 14.8% | 14.8% | 21.7% |
| Eligible dividends | 6.4% | 6.4% | 18.0% |
| Other dividends | 20.3% | 20.3% | 34.2% |
| Average rate | 13.9% | 19.5% | 26.6% |
How does the province change the marginal rate?
Provincial steps differ, so the same $95,000 costs a different amount on the next dollar depending on where you live on December 31. This table uses the same calculator with $95,000 of employment income.
| Province | Interest or rent | Capital gains | Eligible dividends | Average rate |
|---|---|---|---|---|
| Ontario | 29.6% | 14.8% | 6.4% | 19.5% |
| Alberta | 30.5% | 15.3% | 10.2% | 19.2% |
| British Columbia | 28.2% | 14.1% | 1.6% | 18.4% |
| Nova Scotia | 37.2% | 18.6% | 18.4% | 24.7% |
| Quebec | 36.1% | 18.1% | 16.4% | 22.8% |
Why is interest taxed twice as hard as a capital gain?
At $95,000 the next dollar of interest is taxed at 29.6%. A capital gain gets 14.8%, exactly half, because only half of a gain counts as income. Eligible dividends are cheaper still at 6.4%, and a dollar of other dividends costs 20.3%. Move up to $150,000 and the top rates jump to 43.4%, because the next federal band and the higher Ontario steps arrive together.
One oddity. Extra pay from work can look cheaper than interest at some incomes, like the 28.1% at $60,000. The tool's note explains why: pay from work also raises CPP and EI until they reach their maximums, and that changes the net result.
Where does the marginal rate help?
Most people use it for an RRSP. A deduction saves tax at your marginal rate, so a $5,000 contribution at 29.6% takes about $1,480 off the bill, a decent ballpark before you fill in a single form. The tax refund calculator shows what that looks like on a return, and our page on RRSP tax savings has more incomes. The number is also worth checking before you pick between interest, gains and dividends for a new investment, or decide whether an overtime shift or a bonus is worth chasing.
Picture Priya in Edmonton, on $95,000, who rents out her basement suite for an extra $3,000 over the year. At roughly 30.5% the taxman takes about $915 of it and she keeps $2,085.
Selling shares or property? The capital gains tax calculator prices the whole sale. The credit behind those low dividend rates is covered in the dividend tax calculator, and your full yearly bill comes out of the income tax calculator. If you are comparing provinces, the Canada tax brackets page lists every scale.
What are the limits, and where do the figures come from?
The rate is measured on a $1,000 change. A very large amount can cross into a higher step and cost more than the tool shows. Benefits that shrink as income grows are not modelled either, so a rate that looks fine here can be a few points higher in real life if you also receive an income-tested benefit.
Federal and provincial brackets are the 2026 figures from Canada.ca and the provincial pages. We re-ran the tables above on the calculator in November 2026 and checked the federal brackets against the CRA page. No government body has any connection with this site.
About this calculator
- What it does
- See the tax on your next dollar of pay, interest, capital gains and dividends.
- Category
- Income Tax
- Last checked
- November 12, 2026
- Result type
- Estimate for information only, not tax advice.
Frequently asked questions
What is a marginal tax rate?
It is the share of your next dollar that goes to tax. At $95,000 in Ontario that is 29.6% on interest, against a 19.5% average rate.
Why do dividends cost less tax than interest?
A dividend comes with a credit that cancels part of the tax. At $95,000 in Ontario, eligible dividends cost 6.4% and interest costs 29.6%.
Why is the rate on capital gains only half as high?
Only half of a gain counts as income, so the rate is half the ordinary one: 14.8% against 29.6% at $95,000 in Ontario.
Does a raise really lose most of its value to tax?
No. Only the part above your current step is taxed at the higher rate, and everything below keeps its old rate. A raise always leaves you ahead.
Does the province change the answer?
Yes. At $95,000 the rate on extra interest is 29.6% in Ontario, 30.5% in Alberta, 28.2% in British Columbia and 37.2% in Nova Scotia.
How do I use my marginal rate for an RRSP?
Multiply the contribution by your marginal rate. At 29.6%, a $5,000 deduction saves about $1,480 of tax. Your actual saving depends on how the deduction spans tax steps.
Sources and updates
Updated: . How we check rates · Editorial team · Updates