For example, in September 2024, the average weekly salary in Canada was C$1,304.43. This will reach an average annual salary of $67,830.36.
This means that the average job in Canada falls under the second federal tax range. They will pay a 15% tax on their first $55,867 and pay a 20.5% tax on their earnings taxes over $55,867. This leaves them with a federal tax of $10,841.54 ($8,389.05 + $2,452.49).
How to use federal tax charts
To use the table above, make sure that your annual total income belongs to. Next, subtract the minimum dollar value of revenue for that year. Multiply the result amount by the corresponding tax rate. Finally, add the maximum total tax in the previous brackets to estimate your 2024 federal tax.
Here is an example of how you calculate federal taxes based on annual taxable income of $60,000 in 2024.
- Determine the appropriate layer: The amount of income fell within the second tier, with revenue ranging from $55,867 to $111,733.
- Calculate the amount in the layer: Subtract the lower boundary of that range from your annual income: $60,000 – $55,867 = $4,133.
- Determine the tax rate: For the second tier, the tax rate is 20.5%.
- Calculate the tax amount for this layer: Multiply the amount in the tier by the tax rate: $4,133 x 0.205 = $847.26.
- Estimate your total federal tax amount: To estimate your total federal tax liability for 2024, add that level of tax to the total tax on the previous tier at $8,389.05 (from the first tier) plus $847.26, resulting in taxes payable $9,236.31.
Comments on deductions
These taxable income calculations have not yet taken into account potential deductions that may reduce taxable income, such as basic personal tax credits ($15,705 in 2024), RRSP contributions and other deductions. Canadian tax brackets are tools to get federal tax liability estimates, but the exact amount can only be determined when you complete your income tax return for that year.
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Provincial and territorial tax ranks in Canada
You are not finished yet. After calculating federal taxes, the next step is to determine the tax rate for your province or territory. (Remember that these calculations do not include any potential tax deductions, but they can help guide you to any tax saving opportunities, such as RRSP contributions.)
Canadians are divided into two levels of taxation because different levels of government are responsible for different services. For example, provincial governments manage health care, while national security, including the Canadian Armed Forces and the Royal Canadian Mounted Police (RCMP), falls under federal jurisdiction. Our taxes help fund these services, depending on where you live. (There are municipal taxes, too, but these taxes are not taken from income, but are calculated based on property owned by municipalities.)
Since the income range and tax rates within tax brackets may change yearly, it is crucial to keep the latest information that applies to your brackets. Remember that even if the tax rates are consistent, the income range is usually adjusted annually to take into account inflation.
