To give one other example, in September 2024, the typical weekly wage across Canada was $1,304.43 Statistics Canada. This equates to a median annual salary of $67,830.36.
This means the typical working Canadian falls into the second federal tax bracket. They would pay 15% tax on their first $55,867 and 20.5% tax on their earnings above $55,867. That leaves them with $10,841.54 in federal taxes owed ($8,389.05 + $2,452.49).
How to make use of the federal tax bracket table
To use the table above, discover the tiers your total annual income falls into. Next, subtract the minimum dollar value of this range out of your annual income. Multiply the resulting amount by the suitable tax rate. Finally, add the utmost total tax from the previous column to estimate your federal taxes for 2024.
Here is an example of how you’d calculate your federal taxes based on an annual taxable income of $60,000 in 2024.
- Identify the suitable stage: The income amount falls into the second tier, which incorporates income from $55,867 to $111,733.
- Calculate the quantity throughout the stage: Subtract the lower limit of this range out of your annual income: $60,000 – $55,867 = $4,133.
- Determine the tax rate: For the second stage the tax rate is 20.5%.
- Calculate the tax amount for this stage: Multiply the quantity throughout the bracket by the tax rate: $4,133 x 0.205 = $847.26.
- Estimate your total federal taxes: To estimate your total federal tax liability for 2024, add the tax amount of this tier to the whole tax amount of the previous tier, which could be $8,389.05 (from the primary tier) plus $847.26, leading to a tax liability of $9,236 .31 US dollars leads.
Note: These taxable income calculations take into consideration possible deductions which will reduce your taxable income, corresponding to: B. The basic personal tax credit ($15,705 for 2024), RRSP contributions and other deductions should not yet taken under consideration. Canadian tax brackets are used as a tool to estimate your federal tax liability. However, the precise amount is not going to be determined until you complete your income tax return for the yr.
Provincial and territorial tax brackets in Canada
You’re not done yet. After you calculate your federal taxes, the following step is to find out your tax bracket to your province or territory. (Keep in mind that these calculations don’t include potential tax deductions. However, they’ll assist you discover any tax-saving opportunities, corresponding to RRSP contributions.)
Canadians pay tax in two tiers because different levels of presidency are accountable for different services. For example, provincial governments are accountable for health care, while national security, including the Canadian Armed Forces and the Royal Canadian Mounted Police (RCMP), is a federal responsibility. Our taxes help fund these services, depending on where you reside. (There are also municipal taxes, but these should not deducted from income but are calculated based on property within the municipality.)
