And even if the tax rates stay the same, the income ranges are usually adjusted annually for inflation. Our taxes pay for these services, depending on the province you live in.īecause the income ranges and rates for tax brackets often change from year to year, it’s important to stay current on which tier you sit in. For example, health care is run by provincial governments, while national security-including the Canadian Armed Forces and the Royal Canadian Mounted Police (RCMP)-is covered at the federal level. Why do Canadians pay into two levels of taxation? Well, separate levels of government are financially responsible for different areas. Again, these calculations don’t take into account any tax deductions you may be eligible for. Now that you’ve figured out your federal taxes, it’s time to move on to the next step-your tax bracket for the province or territory you are in. The tax brackets for every province and territory in Canada Here’s how that looks for someone earning $90,000 who is in the second federal tax bracket: Finally, add the maximum total tax from the previous bracket to estimate your 2022 federal taxes. Multiply that amount by the applicable tax rate. Then, subtract the minimum dollar value of that range from your annual income. It’s easy to find yourself in the table above: First, find the tier range your annual income falls into. You would pay that same 15% on your first $50,197 in earnings, and any income above that would be taxed at 20.5%, the rate for the second federal tax bracket. Now let’s say your annual income is $90,000-this would put you into the second federal tax bracket. That means you will pay 15% in federal tax-that’s $6,000. Here’s how this gets calculated: The lowest federal tax bracket for 2022 is $0 up to $50,197. If you earned, say, $40,000 from all sources of taxable income-that includes paid work, bank interest, benefits and more-you would fall into that bracket. Most provincial tax brackets work this way as well. Think of Canada’s federal income tax brackets as a ladder: Rates apply only to the earnings that fall within each tier or rung of the ladder. We crunched the numbers so you can find your tax bracket quickly: Annual Income (Taxable) What are the federal tax brackets in Canada for 2022?
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