Canada Income Tax Calculator

How Canadian Income Tax Works

Canada uses a progressive tax system where higher income is taxed at higher rates. You pay taxes at both the federal and provincial level. In addition to income tax, most employees also contribute to the Canada Pension Plan (CPP) and Employment Insurance (EI).

2025 Federal Tax Brackets

Tips to Reduce Your Tax Bill

• Maximize RRSP contributions — reduces taxable income dollar-for-dollar
• Contribute to a TFSA — investment growth is tax-free (doesn't reduce taxable income, but shields future gains)
• Claim work-from-home expenses — simplified method allows up to $500 flat deduction
• Track medical expenses — eligible amounts over 3% of net income qualify for a credit
• Donate to registered charities — 15% federal credit on the first $200, 29% on amounts above

Understanding CPP & EI (2025)

CPP: Both you and your employer contribute 5.95% on pensionable earnings between $3,500 and $71,300 (max $4,034 each). Self-employed individuals pay both portions. CPP2 applies an additional 4% on earnings between $71,300 and $81,200.

EI: Employees pay 1.64% on insurable earnings up to $65,700 (max $1,077). Self-employed individuals can opt in but are not required to contribute.