What is the Canada Income Tax?
Canadians pay federal income tax on a five-band schedule plus provincial tax that varies substantially by province. Alberta has the lowest overall burden; Quebec the highest. On top of tax, employees pay CPP (5.95% up to the yearly maximum) and EI (1.63% in 2026).
The Basic Personal Amount of $16,452 for 2026 is effectively tax-free at the federal level, with each province setting its own equivalent.
Formula & worked example
Federal tax = banded 14% / 20.5% / 26% / 29% / 33%
Total = Federal + provincial + CPP + EI
Worked example: $90,000 in Ontario with an $8,000 RRSP contribution leaves $82,000 taxable. Federal tax is about $10,703, Ontario tax roughly $6,405, and CPP plus EI about $5,354 — total around $22,461, giving monthly take-home near $4,962.
How to use this canada income tax calculator
- Enter your employment income before deductions.
- Add your RRSP contribution — it reduces taxable income directly.
- Select your province; rates vary by several percentage points.
- Provincial figures here are simplified averages; use CRA tables for exact filing.
Smart tips
- RRSP contributions reduce taxable income dollar for dollar — the most direct tax cut available to most Canadians.
- Alberta has no provincial sales tax and the lowest income tax; Quebec the highest but with far more subsidised services.
- CPP contributions stop once you hit the yearly maximum pensionable earnings, so late-year paycheques are larger.
- Claim every credit: tuition, medical expenses, charitable donations and the Canada Employment Amount.
- If you are self-employed you pay both halves of CPP, effectively 11.9%.
Frequently asked questions
What are the federal tax brackets in Canada?
For 2026: 14% to $58,523, 20.5% to $117,045, 26% to $181,440, 29% to $258,482 and 33% above.
Which province has the lowest income tax?
Alberta generally has the lowest combined burden, with no provincial sales tax. Quebec has the highest income tax rates.
Do RRSP contributions reduce my tax?
Yes. They are deducted from taxable income, so the saving equals your contribution multiplied by your marginal rate.
What is the Basic Personal Amount?
$16,452 federally for 2026 — income below this is effectively free of federal tax. It is reduced for net income above $181,440, to $14,829 at $258,482. Provinces set their own equivalents.
Want the theory behind the numbers? Browse the Money Blog for worked guides.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 15 Oct 2026. Sources: Canada Revenue Agency — federal tax rates and brackets, 2026 (page dated 25 Jun 2026), Canada Revenue Agency — CPP rate 5.95%, maximum pensionable earnings and the $3,500 exemption (page dated 31 Oct 2025). How we check these numbers.