Canadian marginal tax rate calculator
What your next dollar actually costs, and what the whole year averaged out to. Adding the federal bracket to the provincial one understates the first by 6.2 points on a $120,000 Ontario salary — because CPP, EI, the surtax and a vanishing credit are all marginal rates that no bracket table shows.
Written and edited by Pablo Ruiz QuinteroSources checked September 1, 2026Rates, ceilings and the surtax read off canada.ca on 2026-09-02| Federal income tax | 26.0 |
| Ontario income tax | 11.2 |
| Provincial surtax | 6.2 |
| Your next dollar costs | 43.41% |
| Average rate on everything you earned | 26.76% |
the two bracket tables add up to 37.16% — 26% federal plus 11.16% Ontario
Adding the two table rates gives 37.16% and understates the real cost by 6.2 percentage points. That line is not a staircase: it falls where CPP and EI stop being charged, which means a raise can make your next dollar cheaper.
Your marginal rate and your average rate, on $120,000 in Ontario
Two numbers describe the same tax bill and they are nowhere near each other. In Ontario, on $120,000 of employment income, the next dollar you earn costs 43.41%. The tax you actually paid across the whole year comes to 26.76% of what you earned.
Canada calls the second one the average tax rate, not the effective rate. The Canada Revenue Agency and every Canadian tax preparer use "average"; "effective" is American usage that has drifted north. They mean the same thing, and if you searched for one you wanted the other.
Which one you need depends entirely on the question. Marginal answers anything about the next dollar: whether to take overtime, what an RRSP contribution returns, whether a bonus is worth the trouble. Average answers anything about the whole year: what proportion of your income went to tax, or how two job offers compare.
Confusing them costs real money in one direction in particular. Someone who uses their average rate of 26.76% to work out what an RRSP contribution saves will understate it by nearly half — the deduction comes off the top, so it saves at 43.41%.
Adding the two bracket tables usually gives the wrong answer
The usual way to produce a Canadian marginal rate is to look up the federal bracket, look up the provincial bracket, and add them. On $120,000 in Ontario that gives 26% plus 11.16%, so 37.16%.
The real cost of the next dollar is 43.41%. The sum of the tables is short by 6.2 percentage points, and at $250,000 it is short by 7.7 percentage points.
Here is the whole of it on $120,000, taken from the engine one line at a time:
Federal income tax — 26.00 points
Ontario income tax — 11.16 points
Provincial surtax — 6.25 points
Those add to 43.41% exactly, because each one is measured by running the full year twice — at your income and a hundred dollars above it — and subtracting the CRA's own figures field by field. Nothing here is a rule of thumb.
Four things are missing from the bracket tables, and each is a genuine marginal rate: CPP and EI, which are charged on income and therefore raise the cost of the next dollar; the Ontario surtax, which is a tax on the tax; the phase-out of the federal basic personal amount above a certain income; and, in Quebec, the federal abatement running the other way.
Ontario's surtax is a tax on the tax, and it is the last one left
Ontario is now the only jurisdiction in Canada that charges a surtax on its own provincial income tax. It is 20% on provincial tax above $5,818, and a further 36% on provincial tax above $7,446.
Because it applies to the tax rather than to the income, it does not appear anywhere in a bracket table — and it multiplies whatever the provincial bracket charges. At $250,000 the 13.16% provincial bracket becomes 20.53% of the next dollar once the surtax has had its turn.
That is the single biggest reason a marginal rate for Ontario quoted from a table is wrong. Anyone paying provincial tax above $5,818 — which on employment income starts well below six figures — is already inside it.
The marginal rate goes down as well as up
Every explanation of tax brackets describes a staircase that only climbs. The real Canadian marginal rate does not: it falls, more than once, at incomes ordinary people earn.
In Ontario it falls three times: around $69,000, from 35.68% to 34.36%; around $75,000, from 34.36% to 32.46%; around $85,000, from 32.46% to 29.65%.
The reason is that CPP and EI stop. Both are charged up to a ceiling and not a dollar beyond it, so the moment you pass the ceiling your next dollar gets cheaper. It is the one place in the tax system where earning more lowers your rate, and no bracket table can show it because neither contribution is in one.
This never means a raise leaves you worse off. The rate on the next dollar changes; the dollars you already had are untouched. Every additional dollar of income leaves you with more after tax than the one before it, at every income, in every province — which is worth stating plainly because the staircase metaphor makes people fear otherwise.
And the honest converse: when the two tables are right
A page that told you the bracket tables are always wrong would be as unhelpful as the ones that add them without thinking. They are wrong for a reason, and the reason switches off.
Below the CPP and EI ceilings the tables are short everywhere in Canada, without exception, because both contributions are charged on income and both raise the cost of the next dollar. On $60,000 in Ontario the tables give 29.65% and the real cost is 35.68% — 6.0 percentage points of contributions the tables cannot see.
Above those ceilings it depends on where you live. In a province with no surtax the contributions have stopped, nothing else intervenes, and the sum of the two brackets is simply correct. At $150,000 that is true in 11 of the thirteen: Alberta, British Columbia, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Prince Edward Island, Saskatchewan, Yukon.
Ontario is the exception, and now the only one, because the surtax never stops. The tables are right here only between $85,000 and $98,000 — the narrow window after the contributions have topped out and before the surtax bites. Either side of it they are short.
So the rule worth carrying: below about $85,000 — the income at which the last contribution ceiling is crossed — add CPP and EI to whatever the tables say. Above that the tables are close, unless you are in Ontario or inside the personal-amount phase-out.
What a $5,000 raise actually leaves you
The marginal rate stops being an abstraction the moment you put a number on it. A $5,000 raise on $120,000 of salary, and what survives it, in every jurisdiction:
1. Nunavut — $3,250 of it reaches you
2. Alberta — $3,200 of it reaches you
3. Yukon — $3,155 of it reaches you
4. Northwest Territories — $3,090 of it reaches you
5. British Columbia — $3,086 of it reaches you
6. Saskatchewan — $3,075 of it reaches you
7. Newfoundland and Labrador — $2,910 of it reaches you
8. New Brunswick — $2,900 of it reaches you
9. Manitoba — $2,830 of it reaches you
10. Ontario — $2,830 of it reaches you ← this page
11. Nova Scotia — $2,825 of it reaches you
12. Prince Edward Island — $2,819 of it reaches you
13. Quebec — $2,715 of it reaches you
Same raise, same job, and $536 between the best province and the worst. That gap is the marginal rate made visible, and it is the number to have in your head before negotiating a number that is quoted before tax.
Note what it is not: it is not $5,000 minus your average rate. Using the average rate of 26.76% would suggest $3,662 reaches you in Ontario, and the real figure is $2,830. A raise is a marginal question, always.
The same $120,000 salary, thirteen different next dollars
The real marginal rate on $120,000 of employment income, everywhere in Canada, highest first:
1. Quebec — 45.71%
2. Prince Edward Island — 43.62%
3. Nova Scotia — 43.5%
4. Ontario — 43.41% ← this page
5. Manitoba — 43.4%
6. New Brunswick — 42%
7. Newfoundland and Labrador — 41.8%
8. Saskatchewan — 38.5%
9. British Columbia — 38.29%
10. Northwest Territories — 38.2%
11. Yukon — 36.9%
12. Alberta — 36%
13. Nunavut — 35%
The spread is 10.7 percentage points between Quebec and Nunavut on an identical salary. That is the number to use when someone tells you a province is cheap or expensive to live in — for the next dollar, at this income.
Each of those has its own page with the same decomposition for that jurisdiction, because the pieces differ: only Ontario has a surtax, and the CPP and EI ceilings land in a different place relative to each province's brackets.
It is not the same ranking at every income, which is why a single league table of provinces is misleading. Brackets start at different places, the surtax bites at a different point, and the CPP and EI ceilings land in the middle of the range. The bracket tables for each province are the place to see why.
The two ends of the scale in Ontario
At the top, the highest provincial bracket here is 13.16% and it begins at $220,000 of taxable income. Combined with everything federal, the most any dollar costs in Ontario is 53.53%.
Where that top bracket starts matters as much as its rate, and the spread across Canada is extraordinary: from $101,200 in Manitoba to $1,141,275 in Newfoundland and Labrador. A province can have a fierce top rate that almost nobody reaches, or a mild one that starts early, and the headline rate alone will not tell you which.
At the bottom, Ontario exempts the first $12,989 through its own basic personal amount, on top of the federal one. That is the 12th most generous of the thirteen, against $22,769 in Alberta and $11,932 in Nova Scotia.
Neither end shows up in a marginal rate for a middle income, and both change what the tax actually costs you over a year. That is the difference between a rate and a bill, and it is why the figure above answers one question rather than all of them.
Which rate to use for the decision in front of you
An RRSP contribution: marginal. It comes off the top of your income, so it saves at 43.41% on $120,000 in Ontario, not at your average rate. The RRSP calculator measures it by recalculating the whole return rather than multiplying by a rate.
Overtime, a bonus or a second job: marginal. All of them are questions about the next dollar. A bonus is not taxed at a special rate — it is added to your income and taxed at whatever the next dollar costs, which is what the bonus calculator works out.
Comparing two offers, or two provinces: average. What matters is total tax over total income in each case. A marginal rate tells you nothing about take-home pay, and the income tax calculator produces the figure that does.
Reading a headline about tax burdens: ask which. A great deal of confident commentary compares one country's top marginal rate against another's average rate and reaches a conclusion that neither figure supports.
Where these figures come from
Rates, thresholds, contribution ceilings and the surtax are read off the CRA's own documents, with the date:
CRA — Current year tax rates and income brackets (2026), federal and provincial — read 2026-09-02. https://www.canada.ca/en/revenue-agency/services/tax/individuals/tax-rates-brackets/current-year.html
CRA — T4127 Payroll Deductions Formulas, 123rd edition effective 1 July 2026 (British Columbia's 5.60% lowest rate, Newfoundland's $13,094 basic amount, PEI's new 20% bracket) — read 2026-09-08. https://www.canada.ca/en/revenue-agency/services/forms-publications/payroll/t4127-payroll-deductions-formulas/t4127-jul/t4127-jul-payroll-deductions-formulas.html
Province of British Columbia — Personal income tax rates, 2026 tax year — read 2026-09-08. https://www2.gov.bc.ca/gov/content/taxes/income-taxes/personal/tax-rates
CRA — T4127 Payroll Deductions Formulas, 122nd edition (basic personal amounts, Ontario surtax, CPP, EI) — read 2026-09-02. https://www.canada.ca/en/revenue-agency/services/forms-publications/payroll/t4127-payroll-deductions-formulas/t4127-jan/t4127-jan-payroll-deductions-formulas-computer-programs.html
CRA — CPP contribution rates, maximums and exemptions — read 2026-09-02. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/canada-pension-plan-cpp/cpp-contribution-rates-maximums-exemptions.html
Revenu Québec — Income tax rates (2026) — read 2026-09-07. https://www.revenuquebec.ca/en/citizens/income-tax-return/completing-your-income-tax-return/income-tax-rates/
Revenu Québec — Source Deductions Return TP-1015.3-V (2026-01), basic personal amount — read 2026-09-07. https://www.revenuquebec.ca/en/online-services/forms-and-publications/current-details/tp-1015-3-v/
Revenu Québec — QPP maximum pensionable earnings and contribution rate; QPIP maximum insurable earnings and premium rate — read 2026-09-07. https://www.revenuquebec.ca/en/businesses/source-deductions-and-employer-contributions/calculating-source-deductions-and-contributions/qpp-contributions/maximum-pensionable-earnings-and-contribution-rate/
CRA — EI premium rates and maximums, including the reduced Quebec rate; CPP2 rates and maximums — read 2026-09-07. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/employment-insurance-ei/ei-premium-rates-maximums.html
Department of Finance Canada — Quebec Abatement (16.5% of basic federal tax) — read 2026-09-07. https://www.canada.ca/en/department-finance/programs/federal-transfers/quebec-abatement.html
Everything on this page is computed from those figures by the same engine that runs the income tax calculator: the marginal rate is measured by calculating the full year at your income and again a hundred dollars above it, and the decomposition subtracts the two results field by field. No figure here is an estimate of another figure.
What it does not cover. This page models employment income. Dividends, capital gains and self-employment each have their own marginal arithmetic — the dividend gross-up in particular produces marginal rates that look nothing like these, and can be negative at low incomes. Provincial credits that taper with income are not modelled, and where one applies to you your true marginal rate is higher than the figure here.
Where to go next
Questions
- What is the marginal tax rate in Ontario?
- On $120,000 of employment income it is 43.41% — the cost of your next dollar. Adding the federal bracket of 26% to the Ontario bracket of 11.16% gives 37.16%, which is the figure most sites publish and it is short by 6.2 percentage points. It changes with income, so use the calculator above for yours.
- What is the difference between marginal and average tax rate?
- Marginal is the rate on your next dollar; average is the tax you paid divided by everything you earned. On $120,000 in Ontario they are 43.41% and 26.76% — a gap of 16.6 percentage points. Canadians say "average"; "effective tax rate" is the American term for the same thing.
- How do I calculate my combined marginal tax rate?
- Not by adding the two bracket rates, which is the usual method and the wrong one. The next dollar also carries CPP and EI until their ceilings, the Ontario surtax on top of provincial tax, and the phase-out of the federal basic personal amount in one band of income. The only reliable way is to calculate the whole year twice, at your income and slightly above it, and take the difference — which is what this page does.
- Can my marginal tax rate go down when I earn more?
- Yes, and in Ontario it does three times: around $69,000, from 35.68% to 34.36%; around $75,000, from 34.36% to 32.46%; around $85,000, from 32.46% to 29.65%. CPP and EI stop at a ceiling, so passing it makes your next dollar cheaper. You are never worse off for earning more — the dollars you already had are unaffected.
- Is a bonus taxed at a higher rate in Canada?
- No. A bonus is added to your income and taxed at whatever your next dollar costs — 43.41% on $120,000 in Ontario. What differs is the withholding: payroll may take off more or less than the eventual tax, and the difference settles when you file.
- What is my average tax rate in Ontario?
- On $120,000 it is 26.76% — $32,117 of total tax and contributions on $120,000 of income. It is always below your marginal rate, because the earlier slices of your income were taxed at lower rates.