2026 income tax brackets for every province and territory

Canada taxes income twice: once federally and once by your province or territory of residence on December 31. Each level has its own brackets, and each rate applies only to the slice of income inside its bracket. Moving into a higher bracket never raises the tax on income you have already earned below it.

For 2026, federal thresholds were indexed by 2%, and the lowest federal rate is 14%, down from 15% before July 2025. Provinces and territories set their own rates and indexation, so the same income is taxed quite differently depending on where you live.

How brackets apply: a worked example

Take $80,000 of taxable income. Federal tax is worked out slice by slice:

That adds up to $12,596. The basic personal amount is then credited at the lowest rate, $16,452 × 14% = $2,303, leaving federal tax of about $10,293. The marginal federal rate, the rate on the next dollar, is 20.5%, but the average federal rate is only 12.9%. The marginal versus average rate guide explains why the difference matters for RRSP and TFSA decisions.

Things the bracket tables do not show

• Surtaxes and premiums. Ontario adds a surtax on provincial tax and a Health Premium, which is why its effective top rate is well above its 13.16% top bracket. The Ontario page shows where each one starts.
• Credit phase-outs. The federal basic personal amount shrinks above $181,440, Manitoba's disappears between $200,000 and $400,000, and the BC tax reduction phases out at low incomes. Each raises the marginal rate over its range.
• Payroll contributions and benefits. CPP or QPP contributions, EI premiums and income-tested benefits such as the Canada Child Benefit are not income tax, but they change how much of an extra dollar you keep.
• Different kinds of income. The rates here apply to ordinary income such as salary, interest and RRSP withdrawals. Only half of a capital gain is taxable, and eligible dividends receive a dividend tax credit, so their effective rates are lower.