Canada Income Tax Calculator 2026

How to calculate tax in Canada, step by step

To calculate income tax in Canada you work out two separate taxes on the same taxable income, one federal and one provincial, subtract the non-refundable credits each one allows, and then take off CPP (or QPP) contributions and EI premiums if you are an employee. The calculator above does all five steps at once; here is what it does with a $85,000 salary in Ontario for 2026.

• Step 1 – taxable income. Start with $85,000 of employment income and deduct the "enhanced" part of your CPP contributions (the first additional 1% and any CPP2). That leaves taxable income of $83,873.
• Step 2 – federal tax on the brackets. 14.0% on the first $58,523, 20.5% on the rest, then subtract 14% of your credits: the basic personal amount ($16,452), the Canada employment amount ($1,501), base CPP and EI. Result: $10,227.
• Step 3 – provincial tax. Ontario applies its own brackets (5.05% to 13.16%), its own $12,989 basic amount, and adds the Ontario Health Premium ($750 at this income). Result: $5,324.
• Step 4 – payroll contributions. CPP and CPP2 come to $4,646.45 and EI to $1,123.07. These are not income tax, but they come off every paycheque.
• Step 5 – take-home pay. $85,000 minus $21,321 in total deductions leaves $63,679 a year, about $5,307 a month. The average rate is 25.1%; the next dollar you earn is taxed at 29.7%.

Federal vs provincial income tax: who taxes what

Every Canadian resident pays federal income tax to the Government of Canada and provincial or territorial income tax to the province where they lived on December 31 of the tax year. If you moved from Alberta to Ontario in November, Ontario taxes the whole year's employment and investment income; your employer's withholding during the Alberta months may not match, which is a common reason for a balance owing.

Outside Quebec both taxes go on one return, the T1, with the provincial part calculated on a form such as the ON428 for Ontario or the BC428 for British Columbia, and the CRA collects both. Quebec runs its own system: residents file the federal T1 with the CRA and a separate TP-1 return with Revenu Québec, which can be sent online through NetFile Québec or by mail. Quebec residents also get a refundable abatement of 16.5% of their basic federal tax, claimed on line 44000 of the federal return.

The federal system is the same in all provinces; the provincial systems differ a lot. In 2026 the lowest provincial rate ranges from 4.00% to 14.00% and the provincial basic personal amount from $11,932 to $22,769. That is why the same $75,000 salary leaves different take-home pay in the province list above.

The federal rate cut to 14%: what changed in 2025 and 2026

The lowest federal income tax rate is 14% for 2026, down from 15%. According to Finance Canada's backgrounder, the cut took effect on July 1, 2025; because it arrived halfway through the year, the full-year rate on 2025 returns is a blended 14.5%, and 14% applies to every year from 2026. Finance Canada said the CRA would adjust source deductions so that employees could have tax withheld at 14% from July 1, 2025, which is why many paycheques rose slightly in the second half of that year.

The cut was legislated by Bill C-4, the Making Life More Affordable for Canadians Act, which received Royal Assent on March 12, 2026. Finance Canada puts the maximum saving at $420 per person and $840 for a two-income couple in 2026. You can check that figure yourself: one percentage point off the first bracket ($58,523) is worth about $585, but the same point also comes off the $16,452 basic personal amount credit, so the net gain is about $421.

CPP, QPP and EI: the deductions that are not income tax

Employees contribute 5.95% of earnings between $3,500 and $74,600 to the Canada Pension Plan, then 4% CPP2 on earnings up to $85,000, and pay 1.63% EI premiums on up to $68,900 of insurable earnings. The most an employee outside Quebec pays in 2026 is $5,769.52 in total. Quebec employees pay QPP at 6.30%, a lower EI rate of 1.30%, and 0.43% for the Quebec Parental Insurance Plan.

Your employer matches your CPP contributions and pays 1.4 times your EI premium on top of your salary, so those amounts never show on your pay stub. If you are self-employed you pay both halves of CPP yourself; see the self-employed tax calculator.

What this Canada tax calculator includes, and what it leaves out

The calculator uses the rates, thresholds and credit amounts published by the CRA for 2026, including the payroll formulas in guide T4127, for a single person with employment income. It handles RRSP contributions as a deduction and converts an hourly wage at the hours per week you enter.

It does not include credits that depend on your circumstances: tuition, medical expenses, charitable donations, the disability tax credit, spousal and dependant amounts, or union dues. Each of these lowers your tax, so treat the result as the tax payable before personal credits. It also does not include benefits paid separately, such as the Canada child benefit or the Canada Groceries and Essentials Benefit (formerly the GST/HST credit); each has its own calculator.