In short
Canadian income tax in 2026 is federal tax at 14% to $58,523, 20.5% to $117,045, 26% to $181,440, 29% to $258,482 and 33% above, less a credit of 14% of the $16,452 basic personal amount, plus provincial tax at each province's brackets, plus CPP (5.95% to $74,600), CPP2 (4% to $85,000) and EI (1.63% to $68,900). On $75,000 in Ontario that is $12,629 of income tax and $5,370 of CPP and EI, leaving about $57,000 — roughly $4,750 a month.
Canadian income tax is really two taxes and two payroll programs layered on one paycheck: federal tax, provincial tax, Canada Pension Plan contributions (now in two tiers) and Employment Insurance premiums. Each has its own brackets, credits or ceilings, which is why two people on the same salary in Ontario and Alberta take home different amounts. This guide sets out the 2026 federal brackets and basic personal amount, shows how Ontario, British Columbia, Alberta and Quebec differ, explains CPP, CPP2 and EI, and works a $75,000 Ontario salary through to net pay so you can check your own T4 or pay stub.
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Federal tax brackets and the basic personal amount
Federal tax for 2026 is charged in five brackets. Like every bracket system, only the income inside each range is taxed at that rate.
| Taxable income (2026) | Federal rate |
|---|---|
| $0 – $58,523 | 14% |
| $58,524 – $117,045 | 20.5% |
| $117,046 – $181,440 | 26% |
| $181,441 – $258,482 | 29% |
| Over $258,482 | 33% |
Canada does not have a tax-free allowance in the UK sense. Instead the basic personal amount (BPA) of $16,452 is a non-refundable credit worth the lowest federal rate: $16,452 × 14% = $2,303 off your federal bill. The BPA phases down to $14,829 for incomes between $181,440 and $258,482. The same mechanism applies to the Canada employment amount ($1,500) and to base CPP and EI contributions: they are all credits at 14%, not deductions from income. RRSP and FHSA contributions, by contrast, are deductions and save tax at your marginal rate — the key distinction when comparing a credit with a deduction.
Provincial tax: Ontario, BC, Alberta and Quebec
Every province and territory sets its own brackets and its own BPA, which is worth the lowest provincial rate. The spread is wide: at $75,000 of taxable income the combined bill differs by several hundred dollars between the three western-and-central examples below, and by much more in Quebec.
| Province | Provincial BPA | First bracket | Top rate | Extras |
|---|---|---|---|---|
| Ontario | $12,989 | 5.05% to $53,891 | 13.16% over $220,000 | Surtax of 20% on provincial tax over $5,818 and 36% over $7,446; Health Premium up to $900 |
| British Columbia | $13,216 | 5.6% to $50,363 | 20.5% over $265,545 | Seven brackets |
| Alberta | $22,769 | 8% to $61,200 | 15% over $370,220 | Highest BPA of the four |
| Quebec | $18,952 | 14% to $54,345 | 25.75% over $132,245 | 16.5% federal abatement; QPP, QPIP and a lower EI rate; separate TP-1 return |
Ontario’s two add-ons
Ontario is unusual in charging a surtax on provincial tax itself (20% of basic Ontario tax above $5,818, plus a further 36% above $7,446) and a separate Ontario Health Premium collected through the tax system. The premium starts at $20,000 of taxable income and climbs in steps: $300 by $36,000, $450 by $48,000, $600 by $72,000, $750 between $72,000 and $200,000, and $900 above $200,000.
Quebec’s abatement
Quebec residents pay the highest provincial rates but receive a 16.5% abatement of federal tax, and they contribute to the Quebec Pension Plan (6.40%) and QPIP instead of CPP, with EI at 1.30% rather than 1.63%. The net effect is still the highest combined bill of the four provinces at most incomes.
CPP, CPP2 and EI
Three payroll amounts come off before you see anything, and all three stop once you hit the annual maximum — which is why net pay often rises late in the year for higher earners.
- CPP: 5.95% of earnings between the $3,500 exemption and the $74,600 year’s maximum pensionable earnings (YMPE). Maximum $4,230.45. Your employer matches it; the self-employed pay both halves.
- CPP2: a second tier of 4% on earnings between $74,600 and $85,000. Maximum $416.
- EI: 1.63% of earnings up to $68,900 of maximum insurable earnings. Maximum $1,123.07; the employer pays 1.4 times your premium.
The tax treatment is split. The base CPP (4.95%) and EI earn a non-refundable credit at the lowest rate. The enhanced CPP portion (1%) and all of CPP2 are deducted from income before tax, so they save tax at your marginal rate.
Worked example: $75,000 in Ontario
Payroll. CPP (74,600 − 3,500) × 5.95% = $4,230.45 (the maximum). CPP2 (75,000 − 74,600) × 4% = $16. EI 68,900 × 1.63% = $1,123.07 (the maximum).
Taxable income. The enhanced CPP portion (71,100 × 1% = $711) and CPP2 ($16) are deducted: 75,000 − 711 − 16 = $74,273.
Federal. 58,523 × 14% = $8,193.22 plus (74,273 − 58,523) × 20.5% = $3,228.75, gross federal tax $11,421.97. Credits at 14% on $22,594.52 (BPA $16,452 + base CPP $3,519.45 + EI $1,123.07 + employment amount $1,500) = $3,163.23. Federal tax $8,259.
Ontario. 53,891 × 5.05% = $2,721.50 plus (74,273 − 53,891) × 9.15% = $1,864.95, gross $4,586.45. Credits at 5.05% on $19,131.52 (BPA $12,989 plus the same $6,142.52) = $966.14. Basic Ontario tax $3,620.31 — below the $5,818 surtax threshold, so no surtax. Health Premium at $74,273 of taxable income: $750. Ontario total $4,370.
Result. Income tax $12,629 (16.8% of gross). Add CPP $4,246 and EI $1,123 for total deductions of $17,999. Net pay $57,001 a year — about $4,750 a month or $2,192 bi-weekly. The marginal rate on the next dollar of taxable income is 20.5% + 9.15% = 29.65%.
On the same taxable income the calculator’s engine gives combined income tax of roughly $11,840 in British Columbia and $12,150 in Alberta, against $12,630 in Ontario; Quebec works out at about $14,750 after the abatement (with QPP and the lower EI rate modeled approximately). The take-home pay calculator splits any of these into per-paycheck amounts for weekly, bi-weekly, semi-monthly or monthly pay.
Reducing the bill: RRSP and TFSA
An RRSP contribution is a deduction, so at $75,000 in Ontario every $1,000 contributed cuts tax by about $297 (29.65%). The 2026 limit is 18% of the previous year’s earned income up to $33,810, plus unused room carried forward. Contributions made at source through payroll reduce withholding immediately; a lump sum produces a refund after you file. The RRSP calculator shows the saving at your own marginal rate.
A TFSA gives no deduction going in — the 2026 room is $7,000, with cumulative room of $109,000 since the account was introduced in 2009 for someone who has never contributed — but growth and withdrawals are tax-free. The TFSA calculator tracks room and projected growth. The usual rule of thumb: RRSP while your marginal rate is high, TFSA while it is low or when you may need the money before retirement.
Common mistakes
- Treating the BPA like a deduction. It removes $2,303 of federal tax for everyone (14% × $16,452), not $16,452 of income; a high earner does not save 33% on it.
- Expecting CPP to keep coming off all year. At $75,000 the CPP and EI maximums are reached in December; at $150,000 they are reached around mid-year and net pay jumps.
- Thinking a bonus is taxed at a higher rate. It is taxed at your marginal rate. Payroll may withhold more on a lump sum, and the difference comes back when you file.
- Ignoring the Ontario Health Premium. It is up to $900 a year and is not shown as a separate line on most pay stubs.
- Forgetting the credit list is longer than this. Spouse, children, medical, tuition and donation credits all reduce the figure; the calculator includes only the BPA, employment amount and CPP/EI credits.
Frequently asked questions
How much tax do I pay on $90,000 in Ontario?
About $16,958 of combined federal and Ontario tax in 2026 (18.8%), or $22,727 including CPP and EI, leaving $67,273 — roughly $5,600 a month.
Which province has the lowest income tax?
Alberta and Nunavut for most incomes — Alberta’s first bracket of 8% runs to $61,200 and its BPA is $22,769. Quebec, Nova Scotia and Newfoundland are the highest.
Is CPP a tax?
No, it is a mandatory contribution to your own pension — 5.95% between $3,500 and $74,600 plus 4% CPP2 to $85,000 in 2026 — matched by your employer. It comes off your pay like a tax but earns a credit and future benefits.
When is the 2026 return due?
April 30, 2027 for most people, and June 15, 2027 if you or your spouse are self-employed — but any balance owing is still due April 30.
Do newcomers pay a full year’s tax?
No. In the year you arrive, income is taxed from your date of residency and the basic personal amount is prorated for the days you were resident.
Sources
- CRA — Canadian income tax rates for individuals (federal and provincial, 2026) and T4127 Payroll Deductions Formulas; checked 26 October 2026.
- CRA — CPP contribution rates, maximums and exemptions; ESDC — 2026 EI premium rate; checked 26 October 2026.
- CRA — RRSP, TFSA and FHSA limits and YMPE; checked 26 October 2026.