Canada Tax Brackets 2026
For 2026, Canadian federal income tax runs from 14% to 33%. Ontario adds 5.05%–13.16% provincial tax, bringing the combined federal + Ontario top marginal rate to 53.53% — with a first-bracket rate cut from 15% to 14%.
Verified against CRA — Tax rates and personal credits (canada.ca). Reviewed by Mark Khondowe, CPA (CPA Canada), ACCA.
Canada · 2026 · Summary
In Canada for the 2026 tax year, federal income tax uses five progressive brackets from 14% to 33%. Ontario adds five provincial brackets from 5.05% to 13.16%. The Basic Personal Amount credit ($16,452 federal; $12,989 Ontario) reduces tax owed. The combined federal + Ontario top marginal rate is 53.53% (on income above $235,675). CPP1, CPP2, and EI premiums are separate from income tax.
2026 Canada income tax brackets
| Federal taxable income | Rate | Cumulative tax |
|---|---|---|
| Up to $58,523 | 14% | $8,193 |
| $58,523 – $117,045 | 21% | $20,190 |
| $117,045 – $181,440 | 26% | $36,933 |
| $181,440 – $258,482 | 29% | $59,275 |
| Over $258,482 | 33% | — |
Federal brackets only. Ontario provincial brackets (5.05%–13.16%), Ontario surtax, CPP, EI, and the Ontario Health Premium are all shown in the full breakdown. Source: CRA canada.ca.
Are Canada tax brackets changing in 2026?
The headline change for 2026 is the federal first-bracket rate cut from 15% to 14%, saving most Canadians approximately $430/year. The federal BPA increased from $16,129 to $16,452. CPP1 maximum pensionable earnings rose to $74,600 (employee max: $4,230.45). EI maximum insurable earnings increased to $68,900. The Ontario provincial rates and thresholds are unchanged.
| Threshold / parameter | Previous year | 2026 | Change |
|---|---|---|---|
| Federal first-bracket rate | 15% | 14% | Rate cut 2026 |
| Federal Basic Personal Amount | CA$16,129 | CA$16,452 | +CA$323 |
| CPP1 max pensionable earnings | CA$73,200 | CA$74,600 | +CA$1,400 |
| EI max insurable earnings | CA$67,500 | CA$68,900 | +CA$1,400 |
| Ontario brackets and rates | Unchanged | Unchanged | No change |
Canada tax at common income levels (2026)
Computed by the Tax Atlas engine from official 2026 rates. Default filing status; no additional deductions or credits.
| Gross income | Taxable income | Total tax | Take-home | Eff. rate |
|---|---|---|---|---|
| $50,000 | $50,000 | $10,748 | $39,252 | 21.5% |
| $80,000 | $80,000 | $21,108 | $58,892 | 26.4% |
| $120,000 | $120,000 | $34,500 | $85,500 | 28.7% |
| $180,000 | $180,000 | $61,013 | $118,987 | 33.9% |
| $300,000 | $300,000 | $121,820 | $178,180 | 40.6% |
Step-by-step: $120,000 gross
Use the income tax calculator for a personalised calculation with your exact income, filing status, and deductions.
How Canada tax brackets work
Canadian income tax is assessed at two levels simultaneously — federal and provincial. Ontario residents pay both federal tax (five brackets: 14%–33%) and Ontario provincial tax (five brackets: 5.05%–13.16%). The brackets do not stack multiplicatively — each level independently applies its own rates to the same taxable income. The total combined rate is the sum.
A key Canadian distinction: the Basic Personal Amount (BPA) is a non-refundable tax credit, not a deduction. The federal BPA of $16,452 generates a credit of $16,452 × 14% = $2,303 — directly reducing federal tax payable. This gives the same dollar saving at every income level, regardless of marginal rate. For high earners (above $181,440), the federal BPA phases out to a minimum of $14,829 at $258,482.
Ontario adds a surtax on top of basic provincial tax (Ontario bracket tax minus the Ontario BPA credit). If basic Ontario tax exceeds $5,818, you pay 20% on the excess. If it exceeds $7,446, a further 36% applies above that second threshold — both tiers apply simultaneously. The cumulative effect above $7,446 is a 56% surtax on incremental provincial tax, which kicks in at roughly $93,000 gross.
In addition to income tax, employees pay CPP contributions and EI premiums — both capped and separate from the bracket system. CPP1 (5.95%, max $74,600 earnings), CPP2 (4%, on $74,600–$85,000), and EI (1.63%, max $68,900) are deducted alongside tax. Ontario residents also pay the Ontario Health Premium (up to $900/year).
Canada tax: key rules and exceptions
The Basic Personal Amount (BPA) is a non-refundable tax credit — not a deduction from income. The federal BPA of $16,452 generates a credit of $16,452 × 14% = $2,303 applied against tax payable. This credit saves the same dollar amount regardless of marginal rate. However, the federal BPA phases out for very high earners: above $181,440, the BPA reduces until it reaches a minimum of $14,829 at $258,482.
Ontario's surtax adds a second layer to provincial tax. When basic Ontario tax exceeds $5,818, a 20% surtax applies to the excess. Above $7,446, a further 36% applies cumulatively — giving a combined 56% surtax on incremental Ontario tax in that zone, which kicks in around $93,000 gross income. This means Ontario residents face a notably higher effective rate than residents of lower-tax provinces like Alberta.
CPP2 (second-tier CPP) was introduced in 2024 and continues for 2026. It applies 4% on earnings between $74,600 and $85,000 — an additional $420 maximum contribution per year. Unlike CPP1, CPP2 contributions generate a 4% federal tax deduction rather than the standard 15% credit, making it slightly less tax-efficient per dollar contributed.
How do tax brackets work? (Common misconception)
A common misconception is that earning more can leave you worse off — that crossing into a higher bracket means more of your income gets taxed at a higher rate. This is not how progressive taxation works.
Each bracket applies only to the income that falls within its range. If your income crosses into a higher bracket, only the amount above the threshold is taxed at the higher rate — not your entire income. A higher salary always means higher take-home pay.
Your marginal rate is the rate on your last dollar earned. Your effective rate is total tax divided by gross income — always lower than your marginal rate. See the marginal tax rate and effective tax rate glossary entries.
Calculate your exact Canada tax
Enter your income for a full breakdown including all deductions, credits, and social contributions.
Frequently asked questions
- How does Canadian federal income tax work in 2026?
- Federal income tax uses five progressive brackets: 14% on the first $57,375 of taxable income; 20.5% on $57,376–$114,750; 26% on $114,751–$158,519; 29% on $158,520–$220,000; 33% above $220,000. The Basic Personal Amount credit ($16,452 × 14% = $2,303) is applied against this tax — it is a credit, not a deduction from income.
- What is the Ontario surtax and why does it matter?
- Ontario surtax is an extra levy on basic Ontario tax that kicks in at roughly $93,000 gross income. It charges 20% on basic Ontario tax above $5,818 and an additional 36% above $7,446 — both tiers apply simultaneously. The cumulative 56% surtax means Ontario residents pay a combined marginal rate of 53.53% on top incomes, making Ontario one of the highest-taxed provinces in Canada.
- Are CPP and EI included in the tax brackets?
- No. CPP (Canada Pension Plan) and EI (Employment Insurance) are separate mandatory contributions from your paycheck. CPP1 is 5.95% on earnings between $3,500 and $74,600; CPP2 is 4% on $74,600–$85,000; EI is 1.63% on up to $68,900. These are not income taxes — they fund your retirement pension and unemployment benefits respectively.
- What is the combined top marginal rate in Ontario?
- For Ontario residents with income above $235,675: federal rate is 33%, Ontario rate is 13.16%. The combined federal + provincial top marginal rate is 53.53%. Above $220,000 federally and $220,000 provincially, these are the applicable bracket rates. Note this excludes CPP (which is capped and not applied above $85,000) and EI (capped at $68,900 insurable earnings).
- Do brackets differ in other provinces?
- Yes. This calculator covers Ontario only. Other provinces have their own brackets added to the federal tax. Quebec, British Columbia, Alberta, and Manitoba all have different provincial rates. Quebec residents also have a separate provincial tax return, separate EI rate, and pay into the Quebec Parental Insurance Plan (QPIP).