This post provides the 2014 combined tax rates as tables and charts for the Canadian federal government and all the provinces and territories. The Marginal Tax Rate is mentioned a lot when discussing retirement income. It is defined as the amount of tax paid on an additional dollar of income. It is sometimes difficult to determine this value as it changes by province. This post shows the marginal and average rates for each tax bracket and provides a downloadable spreadsheet which also contains the charts for each province.

Combined Federal & Provincial Tax Brackets

The federal government has 4 tax brackets. Provinces have from 3 to 5 which rarely match the federal brackets.  Because the highest bracket is normally shared, this results is between 6 and 8 tax brackets. Thus, income differences and the marginal rate between brackets sometimes are not too great.

There is also significant differences between each province. They each have different tax brackets and marginal tax rates. Using a standard rate without regard to your province of residence can lead to erroneous results if you are not careful. For example, the combined federal and provincial first tax brackets are given in the chart below, by province. The blue bars are the maximum income for the bracket and the red percentages are the rate each dollar is taxed at. Notice that the % values range from 19% to 31% for the first $30,000 to $45,000.

The information provided below is also in an Excel spreadsheet which you can download. Please click on Download Spreadsheet now and open it if you want to use it. The spreadsheet also contains charts for each province, similar to this one for Manitoba.

The blue line is the marginal tax rate while the red line is the average. Notice that while there is a considerable difference between the % along the Y-axis between the marginal and average rates, the average increases almost linearly once the first tax bracket has been exceeded.

The way to interpret the charts and the tables below is to determine what your total taxable income (line 260 of the Federal T1 General form) will be for your province without the new income being considered. Then go to the Fed+Province column and note the %. This is the marginal tax rate that any new income will incur. Also examine if the new income pushes the total income into the next tax bracket. If it does, the amount that exceeds the start of the bracket will be taxed at the bracket’s rate.

Examine the ‘From’ and ‘To’ values carefully or use the values on the x-axis of the charts (note that they are spaced by value). To make it easier to see the difference between each tax bracket, the $ Diff and % Diff columns show the difference between tax brackets. Some differences are small because of the interspersing of federal and provincial brackets. The Source column indicates which jurisdiction is responsible for the tax bracket. The End Tax column is the total taxes to be paid when the income reaches the To value. The End Tax is then divided by the To income to generate the Average tax rate. The average is shown on the charts and it is continuous, unlike the Marginal Tax Rate which is flat between the tax brackets.

Find the province you want by scrolling down. They are in alphabetic order. Find your total taxable income in the From & To columns. Use the combined rate in the Fed+Province (provinces are given by their postal abbreviation) column which will be the Marginal Tax Rate.