How it works
How Canadian income tax works in 2026. You pay two layers of income tax on the same taxable income: federal tax and provincial or territorial tax. The federal rates for 2026 are 14% up to $58,523, 20.5% up to $117,045, 26% up to $181,440, 29% up to $258,482 and 33% above that. The lowest rate was cut from 15% to 14% for 2026 (14.5% in 2025). Tax credits, not deductions, remove the first slice of income from tax: the federal basic personal amount is $16,452 (reduced to $14,829 for very high incomes) and the Canada employment amount is up to $1,501. Credits are worth 14% of their amount.
CPP, CPP2, EI and Quebec
Outside Quebec you pay CPP at 5.95% on earnings between $3,500 and $74,600 (maximum $4,230.45) and CPP2 at 4% on earnings from $74,600 to $85,000 (maximum $416). The base 4.95% earns a tax credit; the extra 1% and CPP2 are deducted from income. EI is 1.63% on earnings up to $68,900 (maximum $1,123.07). In Quebec the pension plan is the QPP (6.30%, maximum $4,479.30, plus 4% QPP2), EI is 1.30% (maximum $895.70) and the Quebec Parental Insurance Plan takes 0.43% up to $103,000. Quebec residents also get a 16.5% reduction of their federal tax, and Quebec taxes you separately at 14%, 19%, 24% and 25.75%, with a basic personal amount of $18,952 and a worker's deduction of up to $1,450.
Provinces and territories
Each jurisdiction sets its own brackets and basic personal amount (BPA), included here: Ontario 5.05% to 13.16% (BPA $12,989), British Columbia 5.06% to 20.5% ($13,216), Alberta 8% to 15% ($22,769, new 8% first bracket), Manitoba 10.8% to 17.4% ($15,780, indexation frozen), Saskatchewan 10.5% to 14.5% ($20,381), Nova Scotia 8.79% to 21% ($11,932), New Brunswick 9.4% to 19.5% ($13,664), Newfoundland and Labrador 8.7% to 21.8% ($13,094), Prince Edward Island 9.5% to 20% ($15,000), Yukon 6.4% to 15%, Northwest Territories 5.9% to 14.05% ($18,198) and Nunavut 4% to 11.5% ($19,659). Ontario adds a surtax (20% of Ontario tax above $5,818 plus 36% above $7,446), the income-tested Ontario Health Premium (up to $900) and a small low-income tax reduction. British Columbia has a low-income reduction of up to $575.
Worked example: $65,000 salary
Net pay = gross − federal tax − provincial tax − CPP/QPP − EI − (QPIP) − Ontario Health Premium
- Ontario: federal tax $6,306.99, Ontario tax $2,818.51, Health Premium $600.00, CPP $3,659.25, EI $1,059.50, net pay $50,555.75 a year (about $4,212.98 a month)
- Quebec: federal tax after abatement $5,233.57, Quebec tax $6,587.12, QPP $3,874.50, EI $845.00, QPIP $279.50, net pay $48,180.31 a year (about $4,015.03 a month)
- Alberta: federal tax $6,306.99, Alberta tax $3,064.68, CPP $3,659.25, EI $1,059.50, net pay $50,909.58
What this calculator leaves out
It models an employee with one salary, the basic personal amount, the Canada employment amount, and CPP/QPP/EI/QPIP credits. It does not include other credits (tuition, medical, donations, spouse or dependants), union dues, taxable benefits, bonuses taxed differently at source, or the Ontario LIFT credit and the small low-income credits of other provinces. The RRSP amount is deducted in full and is not limited to your RRSP room. Quebec figures use the federal base-QPP credit split and Quebec's rule that QPP, QPIP and EI have no separate provincial credit. Territorial credits for the Canada employment amount are applied in Yukon and Nunavut. Payroll withholding on your pay stub can differ from this annual calculation.