When it comes to income tax in Canada, how much you will pay as a resident strongly depends on the province you call home. Income tax rates fluctuate significantly across provinces and territories and can have a huge impact on your finances. In this blog post, we provide you with an easy guide to better understand income tax in Canada and to break down the provinces with the lowest and highest income taxes.

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Key Highlights

• The marginal tax rate is a combination of a province’s income tax rate and the federal income tax rate. 
• The 3 Canadian territories and the province of Alberta have the lowest income tax rates in Canada.
• Quebec and the provinces of Atlantic Canada have the highest income tax rates in Canada. 

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Marginal Tax Rates in Canada   

Before making our way down the list of provinces with the lowest and highest income taxes, let’s break down how income tax works in Canada. A key term to keep in mind here is the marginal tax rate, which is the total income tax that each Canadian pays. The marginal tax rate is the combination of the provincial and federal income tax rates. In this way, since the federal income tax rate remains unchanged across the country, Canadians’ income tax is dependent on the province or territory where they reside.

Canada uses a progressive tax structure meant to alleviate taxes on low income earners. This means that the more money you make, the more you are taxed based on the tax bracket you fall under. Additionally, if you earn below the federal basic personal amount, your income is not taxed at all. In 2022, the federal basic personal amount is $14,398, while each province and territory has their own. 

Federal Tax Rates (2022)

Tax Rate	Income Bracket
15%	on the first $50,197 of taxable income, plus
20.50%	on the next $50,195 of taxable income (on the portion of taxable income over 50,197 up to $100,392), plus
26%	on the next $55,233 of taxable income (on the portion of taxable income over $100,392 up to $155,625), plus
29%	on the next $66,083 of taxable income (on the portion of taxable income over 155,625 up to $221,708), plus
33%	of taxable income over $221,708

Top 5 Provinces with the Lowest Tax Rates

Here are the top 5 provinces with the lowest income tax rates in Canada. 

Data sourced from insurdinary.ca and turbotax.intuit.ca

Alberta

Alberta tops the list as one of the provinces with the lowest tax rate in Canada. While it shares this top spot with the country’s 3 territories, it boasts a significantly larger population paired with a high average individual income. Over 4.4 million people live in Alberta, approximately 1.6 million of whom are based in Calgary, the province’s capital.

The key reason why Albertans pay less taxes is mainly because Alberta has the highest basic personal amounts in all of Canada. For reference, Alberta’s basic personal amount is $19,369, while the federal basic personal amount is $14,398. This means that Alberta residents are only taxed on their income when they make more than $19,369. Moreover, Alberta has the third highest average individual income in Canada and the fourth highest average household income.

Average Individual Income (before taxes): $61,865
Average Household Income (after taxes): $80,449

Income tax rates in Alberta range between 10% and 15%, while the marginal income tax rates range between 25% and 48%. Based on the table below, it is worth noting that Alberta’s lowest tax bracket has a much higher salary range than other provinces and territories. 

Alberta Income Tax Rate (2022)

Tax rate	Tax bracket
10.00%	$131,220 or less
12.00%	$131,221 to $157,464
13.00%	$157,465 to $209,952
14.00%	$209,953 to $314,928
15.00%	more than $314,928

Northwest Territories

The Northwest Territories boasts the second highest individual income among the Canadian provinces and territories in 2022 but, much like the other territories, has a very small population: an estimated 45,605 people. 

Average Individual Income (before taxes): $77,670

Income tax rates in the Northwest Territories range between 5.9% and 14.05%, while the marginal income tax rates range between 20.09% and 47.05%.

Northwest Territories Income Tax Rate (2022)

Tax rate	Tax bracket
5.90%	$45,462 or less
8.60%	$45,463 to $90,927
12%	$90,928 to $147,826
14%	more than $147,826

Nunavut

Nunavut boasts the highest individual income among the Canadian provinces and territories in 2022 but, much like the other territories, has a very small population: an estimated 39,589 people. Not only is Nunavut the least populated region in Canada, it is one of the least populous places in the entire world. 

Average Individual Income (before taxes): $87,355

Income tax rates in Nunavut range between 4% and 11.50%, while the marginal income tax rates range between 19% and 44.50%.

Nunavut Income Tax Rate (2022)

Tax rate	Tax bracket
4.00%	$47,862 or less
7.00%	$47,863 to $95,724
9.00%	$95,725 to $155,625
11.50%	more than $155,625

Yukon

The Yukon has the fourth highest individual income among the Canadian provinces and territories in 2022 but, much like the other territories, has a very small population: an estimated 43,744 people. 

Average Individual Income (before taxes): $61,812

Income tax rates in the Yukon range between 6.4% and 15%, while the marginal income tax rates range between 21.40% and 48%.

Yukon Income Tax Rate (2022)

Tax rate	Tax bracket
6.40%	$50,197 or less
9.00%	$50,198 to $100,392
10.90%	$100,393 to $155,625
12.80%	$155,626 to $500,000
15.00%	more than $500,000

Saskatchewan

The territories aside, Saskatchewan follows Alberta as the province with the second lowest income tax rate. Saskatchewan’s population is 1,194,803 and Saskatoon, its most populous city, is home to 337,000 people. Saskatchewan ranks 7th for average individual income and 6th for average household income in Canada. Both in terms of population and average incomes, there is a notable difference between Saskatchewan and Alberta.

Average Individual Income (before taxes): $54,371
Average Household Income (after taxes): $78,000

Income tax rates in Saskatchewan range between 10.5% and 14.5%, while the marginal income tax rates range between 25.5% and 47.5%. It is worth noting that while their marginal tax rates are similar, the difference between Saskatchewan and Alberta tax brackets make for contrasting stories in terms of income tax for some Canadian earners. 

Saskatchewan Income Tax Rate (2022)

  

Tax rate	Tax bracket
10.50%	$46,773 or less
12.50%	$46,774 to $133,638
14.50%	more than $133,638

Top 5 Provinces with the Highest Tax Rates

Moving on towards Atlantic Canada, here are the top 5 provinces with the highest income tax rates in Canada.

Data sourced from insurdinary.ca and turbotax.intuit.ca

New Brunswick

Despite making it on this list, New Brunswick’s income tax rate is the lowest among the top five provinces with the highest rates. New Brunswick has a population of 794,300, its largest cities being Moncton (71,889), Saint John (67,575), and its capital Fredericton (58,220). Average incomes in New Brunswick are ranked one of the lowest in the country, with average individual income coming in eleventh place and average household income in 9th. 

Average Individual Income (before taxes): $49,511
Average Household Income (after taxes): $59,000

Income tax rates in New Brunswick range between 9.4% and 20.3%, while the marginal income tax rates range between 24.4% and 53.3%. It is worth noting that while New Brunswick’s individual income tax rates are relatively high, the province fares much better when it comes to families with children. For example, for families with 2 children and a household income of over $100,000, New Brunswick’s rate is 21,9%, the second lowest in all of Canada.

New Brunswick Income Tax Rate (2022)

Tax rate	Tax bracket
9.40%	$44,887 or less
14.82%	$44,888 to $89,775
16.52%	$89,776 to $145,995
17.84%	$145,996 to $166,280
20.30%	more than $166,280

Newfoundland and Labrador

Newfoundland and Labrador has a population of 525,972, with a majority of people (212,579) living in St. John’s, the provincial capital. Newfoundland’s average individual income ranks sixth in the country, while its average household income ranks third.

Average Individual Income (before taxes): $55,508
Average Household Income (after taxes): $82,540

Income tax rates in Newfoundland and Labrador range between 8.7% and 21.8%, while the marginal income tax rates range between 23.7% and 54.8%. 

Newfoundland and Labrador Tax Rate (2022)

Tax rate	Tax bracket
8.70%	$39,147 or less
14.50%	$39,148 to $78,294
15.80%	$78,295 to $139,780
17.80%	$139,781 to $195,693
19.80%	$195,694 to $250,000
20.80%	$250,001 to $500,000
21.30%	$500,001 to $1,000,000
21.80%	more than $1,000,000

Quebec

Almost a mirror to Alberta, Quebec presents a unique case on the opposite side of the taxation spectrum. Quebec has the highest taxes of all the Canadian provinces and territories, but also finances a larger number of services than the other governments, such as colleges, universities, community health clinics (CLSCs), daycare, and more. The population of Quebec is the highest on this list by a significant margin totalling 8,695,659, with 1,784,681 people living in Montreal, its most populous city. Quebec ranks low on the list in terms of average individual income– in 9th place, but boasts the highest average household income in the country. 

Average Individual Income (before taxes): $51,735
Average Household Income (after taxes): $87,080

Income tax rates in Quebec range between 15% and 25.75%, while the marginal income tax rates range between 27.53% and 53.31%.

Quebec Tax Rate (2022)

Tax rate	Tax bracket
15.00%	$46,295 or less
20.00%	$46,296 to $92,580
24.00%	$92,581 to $112,655
25.75%	more than $112,655

Prince Edward Island

Returning to Atlantic Canada, Prince Edward Island is the least populated province on this list with a population of 167,680. Charlottetown, the provincial capital, is located at the center of the island where half of the province’s population resides. Prince Edward Island ranks last (13th) in terms of average individual income and ties with Saskatchewan in 6th or 7th place for average household income. 

Average Individual Income (before taxes): $45,912
Average Household Income (after taxes): $78,000

Income tax rates in Prince Edward Island range between 9.8% and 16.70%, while the marginal income tax rates range between 24.80% and 51.37%.

Prince Edward Island Tax Rate (2022)

Tax rate	Tax bracket
9.80%	$31,984 or less
13.80%	$31,985 to $63,969
16.70%	more than $63,969

Manitoba

Last on the list is Manitoba and while it technically does have a higher income tax rate compared to the provinces who have the lowest, Manitoba’s tax rate is overall average. Manitoba’s population is estimated at 1,390,249 residents, 833,000 of which live in Winnipeg, the provincial capital. Manitoba ranks tenth in terms of average individual income, but ranks 2nd in the country for average household income. 

Average Individual Income (before taxes): $49,661
Average Household Income (after taxes): $84,130

Income tax rates in Manitoba range between 10.8% and 17.40%, while the marginal income tax rates range between 25.80% and 50.4%.

Manitoba Tax Rate (2022)

Tax rate	Tax bracket
10.80%	$34,431 or less
12.75%	$34,432 to $74,416
17.40%	more than $74,416

Final Thoughts

The province you call home definitely has a huge impact on the amount of income tax you will pay. When trying to calculate your income tax, it is important to look at both the marginal tax rate (provincia tax rate + federal tax rate) and what the tax bracket in your province looks like, as one always informs the other. 

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