In reference to a popular quote credited to Benjamin Franklin, there are only a few other things in life that are as certain as death and taxes.
Every year, residents of Canada are required to pay taxes on their worldwide income and file an income tax and benefits return. You pay income taxes to both the federal and provincial governments when you have earned more than the minimum “tax-free” personal amounts.
Canada utilizes a graduated income tax system which simply means that the more money you earn, the higher the taxes you pay.
The federal tax brackets are calculated every year based on an inflation factor that is tied to the Consumer Price Index. For 2021, the inflation or indexation rate was 1% (i.e. the indexation factor is 1.01). For 2022, the indexation rate is 2.4% (i.e. a factor of 1.024).
Most provinces utilize a similar inflation factor for calculating provincial income tax brackets, although, their rate may be based on the provincial inflation rate.
Table of Contents
2021-2022 Federal Tax Bracket Rates
The federal personal income tax rates and brackets refer to taxes payable on your taxable income which is your gross income minus deductions, tax credits, and other adjustments.
The federal income tax rates and brackets for 2021 and 2022 are:
| Tax Bracket 2021 | Tax Rate 2021 | Tax Bracket 2022 | Tax Rate 2022 |
|---|---|---|---|
| Up to $49,020 | 15% | Up to $50,197 | 15% |
| $49,021 to $98,040 | 20.50% | $50,198 to $100,392 | 20.50% |
| $98,041 to $151,978 | 26% | $100,393 to $155,625 | 26% |
| $151,979 to $216,511 | 29% | $155,626 to $221,708 | 29% |
| $216,512 and over | 33% | $221,709 and over | 33% |
Provincial Tax Brackets and Rates for 2021 and 2022
The different provinces and territories in Canada also collect income taxes that are payable along with your federal return.
Quebec collects its provincial income taxes directly via Agence du Revenu du Quebec.
The provincial tax rates and brackets for 2021 and 2022 are below (some 2022 numbers are not yet available).
Ontario Tax Brackets 2021-2022
| ON Tax Bracket 2021 | Tax Rate 2021 | ON Tax Bracket 2022 | Tax Rate 2022 |
|---|---|---|---|
| Up to $45,142 | 5.05% | Up to $46,226 | 5.05% |
| $45,143 to $90,287 | 9.15% | $46,227 to $92,454 | 9.15% |
| $90,288 to $150,000 | 11.16% | $92,455 to $150,000 | 11.16% |
| $150,001 to $220,000 | 12.16% | $150,001 to $220,000 | 12.16% |
| $220,001 and over | 13.16% | $220,001 and over | 13.16% |
The indexation factor in use in Ontario is 1.009 for 2021 and 1.024 in 2022 (except for the last two income bracket rates which are not indexed). Ontario has a surtax that is further levied on your provincial income tax, subject to certain thresholds.
Alberta Tax Brackets 2021-2022
| AB Tax Bracket 2021 | Tax Rate 2021 | AB Tax Bracket 2022 | Tax Rate 2022 |
|---|---|---|---|
| Up to $131,220 | 10% | Up to $131,220 | 10% |
| $131,221 to $157,464 | 12% | $131,221 to $157,464 | 12% |
| $157,465 to $209,952 | 13% | $157,465 to $209,952 | 13% |
| $209,953 to $314,928 | 14% | $209,953 to $314,928 | 14% |
| $314,929 and over | 15% | $314,929 and over | 15% |
Alberta’s tax brackets have not been indexed in 2022.
British Columbia Tax Brackets 2021-2022
| B.C. Tax Bracket 2021 | Tax Rate 2021 | B.C. Tax Bracket 2022 | Tax Rate 2022 |
|---|---|---|---|
| Up to $42,184 | 5.06% | Up to $43,071 | 5.06% |
| $42,185 to $84,369 | 7.70% | $42,185 to $86,141 | 7.70% |
| $84,370 to $96,866 | 10.50% | $86,142 to $98,901 | 10.50% |
| $96,867 to $117,623 | 12.29% | $98,902 to $120,094 | 12.29% |
| $117,624 to $159,483 | 14.70% | $120,095 to $162,832 | 14.70% |
| $159,484 to $222,420 | 16.80% | $162,833 to $227,091 | 16.80% |
| $222,421 and over | 20.5% | $227,092 and over | 20.5% |
The indexation factor used to compute B.C’s tax brackets is 1.010 for 2021 and 1.021 for 2022.
Manitoba Tax Brackets 2021-2022
| MB Tax Bracket 2021 | Tax Rate 2021 | MB Tax Bracket 2022 | Tax Rate 2022 |
|---|---|---|---|
| Up to $33,723 | 10.80% | Up to $34,431 | 10.80% |
| $33,724 to $72,885 | 12.75% | $34,432 to $74,416 | 12.75% |
| $72,886 and over | 17.40% | $74,417 and over | 17.40% |
Manitoba’s indexation factor for tax brackets is 1.021 for 2022.
Saskatchewan Tax Bracket 2021-2022
| SK Tax Bracket 2021 | Tax Rate 2021 | SK Tax Bracket 2022 | Tax Rate 2022 |
|---|---|---|---|
| Up to $45,677 | 10.50% | Up to $46,773 | 10.50% |
| $45,678 to 130,506 | 12.50% | $46,774 to $133,638 | 12.50% |
| $130,507 and over | 14.50% | $133,639 and over | 14.50% |
Saskatchewan has an indexation factor of 1.024 for 2022.
New Brunswick Tax Brackets 2021-2022
| NB Tax Brackets 2021 | NB Tax Rate 2021 | NB Tax Brackets 2022 | Tax Rate 2022 |
|---|---|---|---|
| Up to $43,835 | 9.68% | Up to $44,887 | 9.68% |
| $43,836 to $87,671 | 14.82% | $44,888 to $89,775 | 14.82% |
| $87,672 to $142,534 | 16.52% | $89,776 to $145,955 | 16.52% |
| $142,535 to $162,383 | 17.84% | $145,956 to $166,280 | 17.84% |
| $162,384 and over | 20.30% | $166,281 and over | 20.30% |
New Brunswick has an indexation factor of 1.024 for 2022.
Nova Scotia Tax Brackets 2021-2022
| NS Tax Brackets 2021 | Tax Rate 2021 | NS Tax Brackets 2022 | Tax Rate 2022 |
|---|---|---|---|
| Up to $29,590 | 8.79% | Up to $29,590 | 8.79% |
| $29,591 to $59,180 | 14.95% | $29,591 to $59,180 | 14.95% |
| $59,181 to $93,000 | 16.67% | $59,181 to $93,000 | 16.67% |
| $93,001 to $150,000 | 17.50% | $93,001 to $150,000 | 17.50% |
| $150,001 and over | 21.00% | $150,001 and over | 21.00% |
Nova Scotia’s tax brackets are not indexed for inflation in 2022 and remain the same as for the 2021 tax year.
Newfoundland and Labarador Tax Brackets 2021-2022
| NL Tax Bracket 2021 | Tax Rate 2021 | NL Tax Bracket 2022 | Tax Rate 2022 |
|---|---|---|---|
| Up to $38,081 | 8.70% | Up to $39,147 | 8.70% |
| $38,082 to $76,161 | 14.50% | $39,148 to $78,294 | 14.50% |
| $76,162 to $135,973 | 15.80% | $78,295 to $139,780 | 15.80% |
| $135,974 to $190,363 | 17.30% | $139,781 to $195,693 | 17.30% |
| $190,364 and over | 18.30% | $195,694 to $250,000 | 18.30% |
| $250,001 to $500,000 | 20.80% | ||
| $500,001 to $1,000,000 | 21.30% | ||
| $1,000,001 and over | 21.80% |
NL’s indexation factor for 2022 is 1.028.
Prince Edward Island Tax Brackets 2021-2022
| PEI Tax Bracket 2021 | Tax Rate 2021 | PEI Tax Bracket 2022 | Tax Rate 2022 |
|---|---|---|---|
| Up to $31,984 | 9.80% | Up to $31,984 | 9.80% |
| $31,985 to $63,969 | 13.8% | $31,985 to $63,969 | 13.8% |
| $63,970 and over | 16.70% | $63,970 and over | 16.70% |
PEI also levies a surtax of 10% on provincial income tax exceeding $12,500.
PEI’s tax brackets were not indexed for inflation in 2022, leaving the amounts the same as for the 2021 tax year.
Quebec Tax Brackets 2021-2022
| QC Tax Bracket 2021 | Tax Rate 2021 | QC Tax Bracket 2022 | Tax Rate 2022 |
|---|---|---|---|
| Up to $45,105 | 15% | Up to $46,295 | 15% |
| $45,106 to $90,200 | 20% | $46,296 to $92,580 | 20% |
| $90,201 to $109,755 | 24% | $92,581 to $112,655 | 24% |
| $109,756 and over | 25.75% | $112,655 and over | 25.75% |
Quebec’s indexation factor for 2022 is 1.0264.
Yukon Tax Brackets 2022
- Up to $50,197: 6.40%
- $50,198 to $100,392: 9%
- $100,393 to $155,625: 10.90%
- $155,626 to $500,000: 12.80%
- $500,001 and over: 15%
Yukon’s indexation factor for 2022 is 1.024.
Northwest Territories Tax Bracket 2022
- Up to $45,462: 5.90%
- $45,463 to $90,927: 8.6%
- $90,928 to $147,826: 12.20%
- $147,829 and over: 14.05%
The indexation factor for NWT is 1.024 for 2022.
Nunavut Tax Brackets 2022
- Up to $47,862: 4%
- $47,863 to $95,724: 7%
- $95,725 to $155,625: 9%
- $155,626 and over: 11.50%
Nunavut also utilizes an indexation factor of 1.024 for 2022.
How Do Marginal Tax Rates Work?
Your marginal tax rate is the highest rate of tax (federal and/or provincial) that you pay on an additional dollar of income.
For example, if your taxable income is $100,000 and you reside in Manitoba, your combined marginal tax rate is a whopping 43.40%. This means that you are paying 43.40 cents in taxes on every extra dollar you earn at this income level.
Before you lose your hat and go bonkers, your “effective” or “average” tax rate will actually be much lower, and for the example above, it is a much more palatable 28.77%.
Your average tax rate is based on the tiered bracket rates for both provincial and federal income taxes.
Marginal Tax Rate Example (Manitoba)
For a $100,000 taxable income in Manitoba in 2020, the following apply:
Federal Taxes
- Federal marginal tax rate: 26% (for tax bracket $97,070 to $150,473)
- Actual federal tax payable: $16,331
- Average federal tax rate: 16.33%
Provincial Taxes
- Provincial marginal tax rate: 17.40% (for tax bracket $72,165 and over)
- Actual provincial tax payable: $12,440
- Average provncial tax rate: 12.44%
Combined provincial and federal taxes: $12,440 + $16,331 = $28,771.
- Average tax rate (combined): 28.77%
- Marginal tax rate (combined): 43.40%
This tax calculator by Thomson Reuters provides an easy-to-understand outlay of your marginal and average tax rates. It also gives you an idea of the tax rates applicable to capital gains and dividends.
One area where your marginal tax rate can be directly applied is in regards to your RRSP deduction.
If for example, you contributed $10,000 to your RRSP, you can expect a tax refund of $4,340 based on a marginal tax rate of 43.40% and $100,000 taxable income. The $10,000 you contributed during the year is tax-deductible and counts as “extra” income based on your marginal tax rate.
In this scenario, you will have saved $4,340 in taxes for the year.
Note that the tax-shelter offered by an RRSP account is only applicable until you start making withdrawals. Withdrawals are considered taxable income and are taxed based on the tax bracket you fall into at the time of withdrawal.
How To File Your Taxes in 2022
You can file your tax return for the 2021 tax year using online tax preparation services such as TurboTax and WealthsimpleTax. These tax software are CRA-certified and connect with NETFILE to import some of your tax directly numbers from the CRA (e.g. T4).
Following submitting your tax return, you can expect your tax refund within 2 weeks or so if you have signed up for direct deposits.
Learn about the best free tax return software in Canada.
Related reading
- Tax Return Deadline for 2022
- How To File Your Taxes Online in Canada
- RRSP Withdrawals Explained
- RRSP Season and What You Need To Know
- Best Tax-Free Software in Canada
Have a question about how tax rates and brackets work in Canada? Leave them in the comments.
If my mom gives me a certain amount of money to put into my mortgage, do I have to pay taxes on the money she gives me?
@Miroslav: No, you don’t have to pay taxes on the gift.
Are taxes paid on a graduated scale? I.e if I made $217k, do I pay 33%on the whole? or do I pay 15%on the 1st $50k, and 20.5%on the 2nd $50k, and 26%on the 3rd $50k etc… Makes a big difference on whether to accept a marginal pay raise or not!
@Peter: The tax rate is on a graduated scale, subject to the amounts within each bracket.
Enoch, thank you so much for this article, and for the updated indexed figures for each tax bracket.
@Vasile: You are welcome…and thanks for your feedback.