We break down the tax brackets in Canada for 2021 (and provinces, too) primarily based on annual revenue

Why are there federal and provincial tax charges? That’s as a result of they’re separate ranges of presidency, overlaying totally different monetary tasks and have totally different revenues to pay for them. For instance, well being care is run on the provincial stage, such because the Ontario Well being Insurance coverage Plan (OHIP), and B.C.’s Medical Companies Plan (MSP), whereas the navy and nationwide safety is roofed on the federal stage with the Canadian Armed Forces and the RCMP. Our taxes pay for these providers, relying on the province you reside in. 

It’s vital to take a look on the revenue ranges and charges for the tax brackets yearly, as they have a tendency to alter. Even when the speed charged stays the identical from yr to yr, the incomes are often adjusted yearly for inflation.

How tax brackets work for the provinces and territories

Simply as we defined with the federal tax brackets above, begin by discovering chart for the province you in, after which discover the place your annual revenue is within the chart. Subtract the minimal greenback worth of that bracket vary out of your whole annual revenue, then multiply by the relevant tax price. To calculate your estimated revenue tax, add the utmost whole tax from the earlier bracket to approximate your 2021 provincial taxes (earlier than any relevant surtaxes, as defined beneath).

Listed here are the tax brackets for all of the provinces and territories in Canada for 2021, in alphabetical order: 

Alberta tax brackets 2021

British Columbia tax brackets 2021

Manitoba tax brackets 2021

New Brunswick tax brackets 2021

Newfoundland and Labrador tax brackets 2021

Northwest Territories tax brackets 2021

Nova Scotia tax brackets 2021

Nunavut tax brackets 2021

Ontario tax brackets 2021

Prince Edward Island tax brackets 2021

Quebec tax brackets 2021

Saskatchewan tax brackets 2021

Yukon tax brackets 2021

What’s a surtax?

If you happen to take a look at the Ontario and PEI tax charges, the numbers could appear low in comparison with the charges of different provinces. However private revenue in these two provinces is taxed a second time with a surtax, which is actually a tax on a tax.

For PEI residents, anybody with an revenue that’s greater than $12,500 yearly pays a 10% surtax.  (Take your annual revenue quantity and multiply it by 0.10 to calculate the surtax.)

The Ontario surtax has just a few extra steps to calculate this quantity. See the beneath chart. 

For 2021, in case your base provincial tax is beneath $4,874, you pay no surtax. In case your base provincial tax is between $4,874 and $6,237, you pay 20% on the portion of provincial tax owed that’s over $4,874. Lastly, in case your base provincial tax exceeds $6,237, you pay 20% on the portion of provincial tax owed that’s between $4,874 and $6,237 (which works out to $272.60), plus 56% (36% + 20%) on the portion of provincial tax owed over $6,237. Fortunately, most private tax applications determine this out robotically.