Canada Federal Tax Brackets 2026

Canada has five federal income tax brackets in 2026, ranging from 14% to 33%. The 14% bottom rate is a one-year reduction under the OBBBA. The Basic Personal Amount of $16,452 shelters the first slice of income for most earners, and the Canada Employment Amount of $1,501 further reduces federal tax for all employees.

2026 federal income tax brackets

Taxable income Federal rate
Up to $58,52314%
$58,524 to $117,04520.5%
$117,046 to $181,44026%
$181,441 to $258,48229%
Over $258,48233%

These brackets apply after subtracting the Basic Personal Amount, Canada Employment Amount, and other non-refundable credits from gross income. Every province and territory levies its own income tax on top of these federal rates.

Basic Personal Amount and Canada Employment Amount

The Basic Personal Amount (BPA) for 2026 is $16,452 for incomes up to $181,440. Above that it phases down, reaching $14,829 for incomes above $258,482. Because the BPA earns a credit at the lowest federal rate (14%), it reduces federal tax by up to $2,303.28.

The Canada Employment Amount (CEA) of $1,501 is available to every employee and generates a credit of $210.14 at the 14% rate, covering work-related expenses such as home office supplies.

Marginal vs effective rate: an example at $80,000

At $80,000 gross in Ontario, federal tax is $9,243 and Ontario provincial tax is $4,885, for a combined total of $14,128. The marginal federal rate is 20.5% (the bracket for income between $58,523 and $117,045), but the effective combined rate is only 17.7% because only the top portion of income is taxed at 20.5% while the lower portions are taxed at 14% and effectively at 0% up to the BPA.

Federal and Ontario tax by income (2026)

Figures use Ontario as the province. Net pay reflects federal tax, Ontario tax, CPP, CPP2 and EI deductions.

Gross income Federal tax Ontario tax Combined tax Net pay Eff. tax rate
$45,000 $3,338 $1,905 $5,243 $36,554 11.7%
$60,000 $5,338 $2,982 $8,321 $47,340 13.9%
$80,000 $9,243 $4,885 $14,128 $60,303 17.7%
$100,000 $13,302 $6,723 $20,024 $74,206 20.0%
$130,000 $20,102 $11,127 $31,229 $93,002 24.0%
$180,000 $33,102 $20,282 $53,384 $120,847 29.7%
$250,000 $53,524 $34,161 $87,685 $156,546 35.1%

Frequently asked questions

What is the lowest federal income tax rate in Canada in 2026?

The lowest federal rate is 14% in 2026, a temporary reduction from the usual 15% introduced by the One Big Beautiful Budget Act (OBBBA) for the 2026 tax year only. It applies to the first $58,523 of taxable income after deducting the Basic Personal Amount and other credits.

What is the Basic Personal Amount for 2026?

The federal Basic Personal Amount is $16,452 for Canadians earning up to $181,440. It phases down to $14,829 for incomes above $258,482. Because it earns a non-refundable credit at the 14% lowest rate, it effectively shelters up to $2,303 of federal tax for most earners.

How does the marginal rate differ from the effective rate?

The marginal rate is the rate on the next dollar you earn. The effective (average) rate is total tax divided by total income. At $80,000 gross in Ontario the marginal federal rate is 20.5%, but the effective combined rate (federal plus Ontario) is much lower because only the top slice of income is taxed at that rate.

Use the Canada salary calculator to see your exact federal and provincial tax for any province.

Sources: CRA T4127 (2026 edition), Finance Canada OBBBA 2026. Last updated 2026-11-04.