As we head toward the end of a year in which many Canadians’ incomes were erratic, it’s important for taxpayers to find out which provincial and federal tax brackets they fall into. Why? Understanding where you fit will help you estimate how much tax you owe on your 2020 income, while you still have a few months to save up before outstanding payments are due in the spring.
“Your tax bracket lets you know the percentage of taxes you could pay on the next dollar you earn,” says Andrew Zakharia, an accountant and founder of AZ Accounting Firm in Toronto.
Simply put, tax brackets outline how much tax each of us should pay, based on our annual income. In Canada we have what’s called a progressive tax system, which means “the more money you make, the more you are expected to contribute to taxes,” says Zakharia. So, instead of everyone paying a flat percentage of their income in taxes, those with low incomes pay a smaller percentage, with rates progressively increasing for higher income earners.
There are five categories of federal tax rates, with each one classified as an “income bracket” based on how much money you earn in a year (even if you are selfemployed). Since you pay taxes to the federal government, as well as to the provincial government where you reside, there are tax brackets and tax rates for both levels of government (which we’ve outlined in full below).
What are the federal tax brackets in Canada for 2020?

How federal tax brackets work
The most important thing to understand about Canada’s federal income tax brackets (and most provincial brackets, other than Quebec) is that the rates apply only to the earnings that fall within each tier—sort of like a ladder.
So, for example, if someone made $40,000 this year from all their sources of taxable income (including paid work, benefits, bank interest, etc.) they are in the lowest federal bracket for 2020 and will pay 15% in federal tax, or about $6,000. (This, of course, does not account for any deductions or expenses that might lower taxable income, such as the basic personal amount tax credit, or RRSP contributions, which is why this is considered “estimated” federal tax owing.)
But someone who falls into the second federal bracket, let’s say with an annual income of $90,000, still pays the same 15% on their first $48,535 in earnings. It’s only the income over and above that first bracket limit that will be taxed at the higher second bracket rate of 20.5%.
To use the table above, start by finding which range your income falls into. Then subtract the minimum dollar value of that range from your annual income, and multiply by the applicable tax rate. Finally, add the maximum total tax from the previous bracket to approximate your 2020 federal taxes.
Here’s how that looks for a $90,000 earner in the second bracket:
$90,000 annual income – $48,536 2nd bracket minimum
= $41,465
x 2nd bracket rate of 20.5%
= $8,500.32
+ 1st bracket maximum total tax of $7,280
= $15,780.32 total federal taxes payable
Here’s another example (albeit perhaps not very relatable to most readers) for someone in the top bracket earning $500,000:
$500,000 annual income – $214,368 5th bracket minimum
= $285,632
x 5th bracket rate of 33%
= $94,258.56
+ 4th bracket maximum total tax of $49,645
= $143,903.56 total federal taxes payable
The tax brackets for every province and territory in Canada
In the same way that Canada has federal income brackets to calculate taxes, every province and territory has their own tax brackets and tax rates. “Certain expenses are federal responsibilities and certain expenses are provincial responsibilities,” says Zakharia. For example, health care is a provincial accountability, such the Ontario Health Insurance Plan (OHIP), and B.C.’s Medical Services Plan (MSP), and the military and national security is covered at the federal level with the Canadian Armed Forces and the RCMP.
What can you expect with provincial tax brackets? “Every year, the tax brackets increase,” says Zakharia, even if the rates for each bracket remain the same. This is mostly due to inflation, which is basically the increase of prices on some products.
Here are the tax brackets for all the provinces and territories in Canada, in alphabetical order:
Alberta tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Total Tax 

Up to $131,220  The first $131,220  10%  $13,122  $13,122 
$131,220 to $157,464  The next $26,244  12%  $3,149  $16,271 ($13,122 + $3,149) 
$157,464 to $209,952  The next $52,488  13%  $6,824  $23,095 ($16,271 + $6,824) 
$209,952 to $314,928  The next $104,976  14%  $14,696  $37,791 ($23,095 + $14,696) 
Over $314,928  Over $314,928  15%  n/a  n/a 
British Columbia tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Total Tax 

Up to $41,725  The first $41,725  5.06%  $2,111  $2,111 
$41,725 to $83,451  The next $41,726  7.7%  $3,213  $5,324 ($2,111 + $3,213) 
$83,451 to $95,812  The next $12,361  10.5%  $1,298  $6,622 ($5,324 + $1,298) 
$95,812 to $116,344  The next $20,532  12.29%  $2,523  $9,145 ($6,622 + $2,523) 
$116,344 to $157,748  The next $41,404  14.7%  $6,086  $15,228 ($9,145 + $6,086) 
Over $157,748  Over $157,748  16.8%  n/a  n/a 
Manitoba tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Total Tax 

Up to $33,389  The first $33,389  10.8%  $3,606  $3,606 
$33,389 to $72,164  The next $38,775  12.75%  $4,944  $8,550 ($3606 + $4,944) 
Over $72,164  Over $72,164  17.4%  n/a  n/a 
New Brunswick tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Total Tax 

Up to $43,401  The first $43,401  9.68%  $4,201  $4,201 
$43,401 to $86,803  The next $43,402  14.82%  $6,432  $10,633 ($4,201 + $6,432) 
$86,803 to $141,122  The next $54,319  16.52%  $8,974  $19,607 ($10,633 + $8,974) 
$141,122 to $160,776  The next $19,654  17.84%  $3,506  $23,113 ($19,607 + $3,506) 
Over $160,776  Over $160,776  20.3%  n/a  n/a 
Newfoundland and Labrador tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Tax Total 

Up to $37,929  The first $37,929  8.7%  $3,300  $3,300 
$37,929 to $75,858  The next $37,929  14.5%  $5,500  $8,800 ($3,300 + $5,500) 
$75,858 to $135,432  The next $59,574  15.8%  $9,413  $18,213 ($8,800 + $9,413) 
$135,432 to $189,604  The next $54,172  17.3%  $9,372  $27,585 ($18,213 + $9,372) 
Over $189,604  Over $189,604  18.3%  n/a  n/a 
Northwest Territories tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Tax Total 

Up to $43,957  The first $43,957  5.9%  $2,611  $2,611 
$43,957to $87,916  The next $43,959  8.6%  $3,780  $6,391 ($2,611 + $3,780) 
$87,916 to $142,932  The next $55,016  12.2%  $6,712  $13,103 ($6,391 + $6,712) 
Over $142,932  Over $142,932  14.05%  n/a  n/a 
Nova Scotia tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Tax Total 

Up to $29,590  The first $29,590  8.79%  $2,601  $2,601 
$29,590 to $59,180  The next $29,590  14.95%  $4,424  $7,025 ($2,601 + $4,424) 
$59,180 to $93,000  The next $33,820  16.67%  $5,638  $12,663 ($7,025 + $5,638) 
$93,000 $150,000  The next $57,000  17.5%  $9,975  $22,638 ($12,663 + $9,975) 
Over $150,000  Over $150,000  21%  n/a  n/a 
Nunavut tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Tax Total 

Up to $46,277  The first $46,277  4%  $1,851  $1,851 
$46,277 to $92,555  The next $46,278  7%  $3,240  $5,091 ($1,851 + $3,240) 
$92,555 to $150,473  The next $57,918  9%  $5,213  $10,304 ($5,091 + $5,213) 
Over $150,473  Over $150,473  11.5%  n/a  n/a 
Ontario tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Tax Total 

Up to $44,740  The first $44,740  5.05%  $2,259  $2,259 
$44,740 to $89,482  The next $44,742  9.15%  $4,094  $6,353 ($2,259 + $4,094) 
$89,482 to $150,000  The next $60,518  11.16%  $6,754  $13,107 ($6,353 + $6,754) 
$150,000 to $220,000  The next $70,000  12.16%  $8,512  $21,619 ($13,107 + $8,512) 
Over $220,000  Over $220,000  13.16%  n/a  n/a 
Prince Edward Island tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Tax Total 

Up to $31,984  The first $31,984  9.8%  $3,134  $3,134 
$31,984 to $63,969  The next $31,985  13.8%  $4,414  $7,548 ($3,134 + $4,414) 
Over $63,969  Over $63,969  16.7%  n/a  n/a 
Quebec tax brackets 2020
Annual Income/Tax Brackets (Taxable)  Tax Rates  Maximum Tax Total 

Up to $44,545  15%  $6,681 
$44,545 to $89,080  20%  $17,816 
$89,080 to $108,390  24%  $26,014 
Over $108,390  25.75%  n/a 
Saskatchewan tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Tax Total 

Up to $45,225  The first $45,225  10.5%  $4,749  $4,749 
$45,225 to $129,214  The next $83,989  12.5%  $10,498  $15,247 ($4,749 +$10,498) 
Over $129,214  Over $129,214  14.5%  n/a  n/a 
Yukon tax brackets 2020
Annual Income (Taxable)  Tax Brackets  Tax Rates  Maximum Taxes Per Bracket  Maximum Tax Total 

Up to $48,535  The first $48,535  6.4%  $3,106  $3,106 
$48,535 to $97,069  The next $48,534  9%  $4,368  $7,474 ($3,106 + $4,368) 
$97,069 to $150,473  The next $53,404  10.9%  $5,821  $13,295 ($7,474 + $5,821) 
$150,473 to $500,000  The next $349,527  12.8%  $44,739  $58,034143 ($13,295404 + $44,739) 
Over $500,000  Over $500,000  15%  n/a  n/a 
How tax brackets work for the provinces and territories
Similar to the federal tax brackets, you start by finding where your annual income is in the chart from your province (except for Quebec, more on that in a bit). Then subtract the minimum dollar value of that bracket range from your total annual income, and multiply by the applicable tax rate. Finally, add the maximum total tax from the previous bracket to approximate your 2020 provincial taxes (before any applicable surtaxes, as explained below).
As for Quebec, the process is much simpler; less math. You take your total annual income and multiply it by the tax rate for the rage where your annual income sits.
What is a surtax?
You may look at the Ontario and PEI tax rates, and think to yourself, well, that’s pretty low. But personal income in these two provinces is taxed a second time with a surtax. (A surtax means just that, a tax upon a tax.)
For PEI residents, the surtax is 10%, if your income is more than $12,500 annually. Take your income and multiply it by 0.10 to calculate the surtax.
For 2020, the Ontario surtax is a bit more complicated (see chart below). If your base provincial tax is below $4,830, you pay no surtax. If your base provincial tax is between $4,830 and $6,182, you pay 20% on the portion of provincial tax owed that is over $4,830. Finally, if your base provincial tax exceeds $6,182, you pay 20% on the portion of provincial tax owed that is between $4,830 and $6,182 (which works out to $270.40), plus 36% on the portion of provincial tax owed over $6,182.
Thankfully, most personal tax programs figure this out automatically.
Provincial Tax Owed  Surtax Rates 

Less than or equal to $4,830  0% 
$4,830 to $6,182  20% 
Over $6,182  36% 
Thanks for the info, now what?
Knowing where you sit in the federal and provincial tax brackets can be helpful, but what if your income has changed or varies from year to year? And what if you get a raise?
“Understand what tax bracket you’re in and what it means to you,” says Zakharia, adding that if you make more money one year (from a pay raise or side hustle), you don’t need to freak out. It is true that the more money you earn, the more you will be taxed, especially if that nudges you into the next tax bracket. “But not all of your income gets taxed in the higher bracket, it’s just the amount in that range,” says Zakharia. In other words, if you make $100,000, you’re not paying 26% federal tax on the entire $100,000, just on the small portion over $97,069. And the same for the provincial tax, too. For Quebec residents, you just consult the chart above if you move into another tax bracket.
If your side hustle is your own selfemployed business, taxes obviously won’t be automatically deducted from your paycheque. It is your responsibility to set aside money to pay income tax on your net earnings (after deducting business expenses) on a quarterly or annual basis. Be sure to report all your income, otherwise you may have to pay a penalty of 10% on the amount you didn’t report.
As for those with investment income, which includes anything from the sale of a property to cashing in stocks, various rates apply. “Different types of income are taxed differently,” says Zakharia. Dividends, which are aftertax profit distributions from companies, and capital gains, which are profits from the sale of property or investments, are taxed more favourably than other income, such as earnings from employment, business, pension, etc.
Income tax brackets words you need to know
In talking about income tax brackets, you may hear a few of these words, too. Here’s a quick list of definitions for your reference.
Base amount: On your tax form, this is the BPA, also known as the “basic personal amount.” This amount is not taxed, and it was created to avoid taxing individuals with income below this amount. The base amount for 2020 is $13,229.
Gross income: Your full income, untaxed and without deductions.
Income tax bracket: The range of annual income and the income tax rate that is to be applied.
Income tax rate: Amount owed as a percentage of income.
Federal income tax: Payment to the Government of Canada, which is used to fund the federal level of government and programs.
Net income: The amount of personal income you earn, after deductions.
Provincial/territorial income tax: Payment to the levels of government for the provinces and territories, which are used to fund more local levels of government and programs than the federal income tax.
T1 Income Tax and Benefit Return: The form used to create, calculate and file an individual’s income, deductions and taxes owed.
Taxable income: A person’s gross income, which is taxable by the federal and provincial/territorial levels of government. If you are selfemployed, this is net income.
The post The tax brackets in Canada for 2020, broken down by province, too appeared first on MoneySense.