Estimate your 2020 total income taxes with only a few details about your income and province. Find your average tax rate and how much tax you will have to pay on any additional income.
|Average Tax Rate||%||15.58|
|Marginal Tax Rate||%||29.65|
|Provincial tax bracket||Provincial tax rates|
|Less than $ 15714||0 %|
|$15715 to $20644||10.1%|
|$20645 to $44740||5.05%|
|$44741 to $89482||9.15%|
|$89483 to $150000||11.16%|
|$150001 to $220000||12.16%|
|More than $ 220001||13.16 %|
|Federal tax bracket||Federal tax rates|
|Less than $ 13229||0 %|
|$13230 to $48535||15%|
|$48536 to $97069||20.5%|
|$97070 to $150473||26%|
|$150474 to $214368||29%|
|More than $ 214369||33 %|
Your Marginal Tax Rate is the amount of tax you will have to pay on any additional income. It is determined by your provincial and federal tax brackets. If you earn enough to go into the next tax bracket, your marginal tax rate will increase for any additional income after that point. If you earn less than you expect and go into a lower tax bracket, your marginal tax rate will also go down.
For example, if you earn $80,000 and live in Ontario, your marginal tax rate will be 31.48%. If you earn an extra $1,000, you will have to pay an additional 31.48% of that amount in tax, or $314.80.
Tax Brackets are ranges of income that determine how much tax you will have to pay on the income in that bracket. Each bracket has a lower and upper limit as well as a tax rate. If you earn more than the lower limit, you will have to pay that tax rate on any additional income up to the upper limit. Any amount beyond the upper limit will be taxed based on the next tax bracket. Each province has their own set of tax brackets, which can differ from the federal tax brackets.
For example, if you earn $80,000, you will be in the $48,536 to $97,069 tax bracket with a tax rate of 20.5%. This means that you are taxed at 20.5% from your income above $48,536 ($80,000 - $48,536). Any additional income up to $97,069 will be taxed at the same rate. Any income beyond the upper limit will be taxed at the next tax bracket rate of 26%.
At $80,000, you will also have income in the lower two tax brackets: $0 to $13,229 and $13,230 - $48,535. Your income within those brackets ($13,229 and $35,305) will be taxed at their respective tax rates of 0% and 15%.
A common misconception is that when you go up to a higher tax bracket with a higher tax rate, you will have to pay more taxes on all of your income. That is not true. Only the additional income in the higher tax bracket will be taxed at the higher rate and your income in the lower brackets will be taxed at their lower respective rates.