Income Tax Calculator Canada

RRSP contributions are deducted from your gross income before tax is calculated — you pay no tax on contributed amounts until you withdraw. The 2026 contribution limit is 18% of your previous year's earned income, capped at approximately $32,490. Unused contribution room carries forward indefinitely. Withdrawals in retirement are taxed as regular income (presumably at a lower rate).

RRSP: tax deduction now, taxed on withdrawal. Best when you're in a high tax bracket now and expect to be in a lower one in retirement. TFSA: no deduction now, but all growth and withdrawals are tax-free forever. Best when you expect similar or higher tax rates in retirement, or for short-term savings. Most Canadians benefit from contributing to both — RRSP for the immediate tax break, TFSA for long-term tax-free growth.

Federal tax is administered by CRA and is uniform across Canada. Provincial tax is administered separately (except Quebec, which has its own complete system) and varies hugely: Alberta has a 10% flat-ish rate, Ontario goes 5.05–13.16%, Quebec is the highest at 14–25.75%. This calculator covers federal only — add roughly 5–15% extra deduction depending on your province for a true total.

The BPA is a non-refundable tax credit that ensures the first ~$15,705 (2026 federal) of income is effectively tax-free. The federal BPA is enhanced for those earning under $173,205 — high earners get the base amount of ~$14,398. Provinces have their own BPAs on top, generally $10,000-$20,000.

Capital gains have a 50% inclusion rate — meaning half your gain is added to ordinary income and taxed at your marginal rate. The 2024 budget proposed raising this to 66.67% above $250k of annual gains for individuals, but implementation has been turbulent. Your principal residence is fully CGT-exempt. This calculator treats all income as ordinary — don't add gross capital gains, add 50% of them.

Quebec has its own tax system (Revenu Québec) with different rates, deductions, and credits. Quebec residents file two returns: federal (T1) and provincial (TP-1). Quebec also has QPP instead of CPP and QPIP for parental insurance. This calculator's federal computation is accurate for Quebec residents — just expect a separate, larger provincial bill.

Salary calculator: 'What's my biweekly take-home?' — auto-applies federal tax + CPP + CPP2 + EI. Tax calculator: 'What's my total federal tax owed for the year, given my deductions?' — focuses on income tax only, with inputs for RRSP, donations, union dues. Use the salary one for paycheck planning; this one for year-end tax optimization.