Personal Income Tax Rates in Canada

Federal tax rates

Canadian federal personal income tax is structured as a progressive bracket system: the first dollars you earn are taxed at the lowest rate, and each subsequent income range is taxed at a higher rate. Only the income within a given bracket is taxed at that bracket’s rate — a common misconception is that crossing into a higher bracket increases the tax on all your income, which is not how the system works.

Basic personal amount

Before any tax is owed, every individual receives a basic personal amount (BPA) — a portion of income on which no federal tax is payable. For 2025 the federal BPA is $16,129.

The BPA does not work as a deduction; it is a non-refundable tax credit calculated at the lowest-bracket rate (15%). So the federal BPA reduces your federal tax by 15% × $16,129 ≈ $2,419 in 2025.

A higher-income phase-out applies: taxpayers in the top federal bracket receive a slightly smaller BPA than the headline figure. The bracket-by-bracket arithmetic is exactly what our Detailed Income Tax Calculator handles automatically.

How federal and provincial tax combine

Outside Quebec, you pay federal tax administered by CRA plus provincial tax — also administered by CRA in most provinces, on the same return. Your combined marginal rate is the sum of the federal rate at your income and the provincial rate at your income; they are calculated on the same taxable income.

Each province has its own brackets, its own basic personal amount, and (in Ontario and PEI) its own provincial surtax that applies to higher provincial tax amounts.

For a complete combined federal + provincial marginal-rate table by jurisdiction and year, see the Federal Tax Brackets and Rates page.

Dividend tax credits

Dividends paid by Canadian corporations to individual shareholders receive preferential tax treatment via a gross-up + dividend tax credit mechanism. The mechanic is designed to approximate “integration” — to ensure that income earned through a corporation and paid out as a dividend is taxed at roughly the same total rate as if you had earned it directly.

For 2025:

• Eligible dividends (paid out of corporate income taxed at the general rate) are grossed up by 38% and receive a federal dividend tax credit of approximately 15.02% of the grossed-up amount, plus a provincial credit.
• Non-eligible dividends (paid out of small-business income taxed at the lower CCPC rate) are grossed up by 15% and receive a federal credit of approximately 9.03%, plus a (smaller) provincial credit.

For a deeper explanation with worked examples, see our dedicated Dividend Tax Credits page.

Capital gains

When you sell capital property (shares, real estate other than your principal residence, certain other assets) at a profit, only 50% of the gain is included in your taxable income in 2025. The remaining 50% is tax-free.

This is the inclusion rate. It applies before brackets are applied, so a $10,000 capital gain produces $5,000 of taxable income, which is then taxed at your combined marginal rate.

Provincial and territorial rates

Each province and territory publishes its own brackets, BPA, and credit amounts. The 2025 values are available on the per-jurisdiction pages:

• Alberta · British Columbia · Manitoba · New Brunswick · Newfoundland and Labrador · Nova Scotia · Ontario · Prince Edward Island · Quebec · Saskatchewan
• Northwest Territories · Nunavut · Yukon

For combined federal + provincial marginal rate tables across all jurisdictions, see Federal Tax Brackets and Rates.