2023 Canadian income tax brackets

min read

Tax season is around the corner once again, which means taxes are on our minds! Fidelity is here to explain the new 2023 tax brackets and provide some stress relief with an easy-to-understand refresher on how the Canadian tax system works for when you’re filing your 2022 return.

With more and more Canadians opting to file on their own, it’s becoming increasingly important to be tax-literate. Whether you choose to self-file, file with help or hand the task off to an expert, here are some basics that you’ll want to consider as you start filing your income taxes this year.

Know your sources of taxable income.

Firstly, you’ll want to think about your sources of taxable income. For some, this might be straightforward: employment income. But others may have multiple income streams that contribute to their overall taxable income. Common ones to consider include commissions, business and rental income, investment income (such as interest and dividends, as well as capital gains) and a variety of government benefits and pensions. A full list of income types can be found on the CRA website.

Know your eligibility for tax deductions and credits.

You can reduce the amount of income tax you owe via tax deductions and credits. Tax deductions lower your taxable income. Some examples of deductions include RRSP contributions, self-employment expenses, home office expenses, moving expenses and childcare expenses. Tax credits, on the other hand, reduce the amount of tax that you owe. Examples of tax credits include the basic personal exemption, qualifying medical expenses, the charitable tax credit for qualifying donations and gifts, the tuition tax credit and the Home Buyers’ Amount (HBA).

We’re just scratching the surface here; there is lengthy list of available tax deductions and credits that can be found on the CRA website. Think over the last year: what are some things you may be eligible to claim?

Important dates to keep in mind

March 1, 2023: Deadline to contribute to an RRSP, a PRPP, or an SPP to deduct against your 2022 income.
April 30, 2023 (extended to May 1, 2023, since April 30 is a Sunday): Deadline to file your return and pay your taxes.
June 15, 2023: Extended deadline to file your return if you or your spouse or common-law partner are self-employed (note that payment must be made by April 30).
Most individuals who have to pay tax instalments are required to pay by these payment due dates: March 15, June 15, September 15 and December 15.

Know the difference between your average and marginal tax bracket.

Canada uses a progressive tax system, meaning individuals pay higher rates of tax the higher their income gets. Every year, the federal and provincial governments determine the income ranges and the applicable tax rates for those ranges (the “tax brackets”). These tax brackets are reset each year, because they are adjusted upwards to account for inflation. Essentially, your income is divided into different brackets, and is taxed at higher rates the higher the income bracket.

Your marginal tax rate is the taxation rate on your last dollar of taxable income. Your average tax rate is calculated by dividing your total taxes paid by your total taxable income. Don’t forget: both the federal and provincial governments come out with their own tax brackets, so a bit of math is involved to calculate your average and marginal tax rates.

We have taken out the guesswork: Fidelity has a tax calculator tool that helps you easily calculate your average tax rate, total taxable income and year-end balance (or refund) based on your total income and total deductions.

2023 federal tax bracket rates

15% up to $53,359 of taxable income
20.5% between $53,359 and $106,717
26% between $106,717 and $165,430
29% between $165,430 up to $235,675
33% on any amount taxable income exceeding $235,675

2023 tax bracket rates by province

Alberta

10% up to $142,292
12% between $142,292 and $170,751
13% between $170,751 and $227,668
14% between $227,668 and $341,502
15% on any taxable income exceeding $341,502

British Columbia

5.06% up to $45,654 of taxable income
7.7% between $45,654 and $91,310
10.5% between $91,310 and $104,835
12.29% between $104,835 and $127,299
14.7% between $127,299 and $172,602
16.8% between $172,602 and $240,716
20.5% on any taxable income exceeding $240,716

Manitoba

10.8% up to $36,842 of taxable income
12.75% between $36,842 and $79,625
17.4% on any taxable income exceeding $79,625

New Brunswick

9.4% up to $47,715 of taxable income
14% between $47,715 and $95,431
16% between $95,431 and $176,756
19.5% on any taxable income exceeding $176,756

Newfoundland and Labrador

8.7% up to $41,457 of taxable income
14.5% between $41,457 and $82,913
15.8% between $82,913 and $148,027
17.8% between $148,027 and $207,239
19.8% between $207,239 and $264,750
20.8% between $264,750 and $529,500
21.3% between $529,500 and $1,059,000
21.8% on any taxable income exceeding $1,059,000

Nova Scotia

8.79% up to $29,590 of taxable income
14.95% between $29,590 and $59,180
16.67% between $59,180 and $93,000
17.5% between $93,000 and $150,000
21% on any taxable income exceeding $150,000

Ontario

5.05% up to $49,231 of taxable income
9.15% between $49,231 and $98,463
11.16% between $98,463 and $150,000
12.16% between $150,000 and $220,000
13.16% on any taxable income exceeding $220,000

Prince Edward Island

9.8% up to $31,984 of taxable income
13.8% between $31,984 and $63,969
16.7% on any taxable income exceeding $63,969

Quebec

14% up to $49,275 of taxable income
19% between $49,275 and $98,540
24% between $98,540 and $119,910
25.75% on any taxable income exceeding $119,910

Saskatchewan

10.5% up to $49,720 of taxable income
12.5% between $49,720 and $142,058
14.5% on the amount over $142,058

Northwest Territories

5.9% up to $48,326 of taxable income
8.6% between $48,326 and $96,655
12.2% between $96,655 and $157,139
14.05% on any taxable income exceeding $157,139

Nunavut

4% up to $50,877 of taxable income
7% between $50,877 and $101,754
9% between $101,754 and $165,429
11.5% on the amount over $165,429

Yukon

6.4% up to $53,359 of taxable income
9% between $53,359 and $106,717
10.9% between $106,717 and $165,430
12.8% between $165,430 and $500,000
15% on any taxable income exceeding $500,000

Canadian income tax summary

We hope you’ve found this refresher guide helpful. Unsurprisingly, the consensus is that most Canadians wish they were paying less tax. As Canadians, we don’t determine the tax rates, but there are some adjustments we can make on our side that can help lower our tax obligations. The most common way to lower your tax bill is through RRSP contributions. Read here about RRSPs and how they work. You can also use our tax calculator, which illustrates your potential tax savings with varying RRSP contribution amounts. As tax planning is an important pillar of a solid financial plan, discuss with your financial advisor ways you can lower your income tax obligation that work with your overall financial plan.

Share