Why are there federal and state tax rates? That’s because they are separate levels of government that cover different financial responsibilities and have different revenues to pay for them. For example, provincial health care such as the Ontario Health Insurance Plan (OHIP) and BC Medical Services Plan (MSP) are operated, while federal military and national security are operated by the Canadian Armed Forces and the RCMP. Our taxes pay for these services depending on the province you live in.
It’s important to take a look at the income ranges and rates for the tax brackets each year as they tend to change. Even if the calculated rate stays the same from year to year, incomes are usually adjusted annually for inflation.
This is how tax brackets work for the provinces and territories
Just like we explained above with federal tax brackets, start by finding a table for the province you are in, and then find out where your annual income is in the table. Subtract the minimum dollar value of this range from your total annual income, then multiply it by the applicable tax rate. To calculate your estimated income tax, add the total maximum tax from the previous tax bracket to approximate your provincial taxes for 2021 (before any applicable surcharges, as explained below).
Here are the tax brackets for all provinces and territories in Canada for 2021 in alphabetical order:
Alberta tax brackets 2021
Tax brackets in British Columbia in 2021
Tax brackets for Manitoba 2021
New Brunswick tax brackets 2021
Tax brackets for Newfoundland and Labrador 2021
Tax brackets for the Northwest Territories 2021
Nova Scotia tax brackets 2021
Nunavut tax brackets 2021
Ontario tax brackets 2021
Tax brackets on Prince Edward Island in 2021
Quebec tax brackets 2021
Tax brackets for Saskatchewan 2021
Yukon tax brackets 2021
What is a surcharge?
When you look at Ontario and PEI tax rates, the numbers may seem low compared to other provincial rates. But personal income in these two provinces is taxed a second time with a surcharge, which is literally a tax on a tax.
For PEI residents, anyone with an income of more than $ 12,500 per year pays a 10% surcharge. (Take your annual income amount and multiply it by 0.10 to find the supplement.)
The Ontario Surcharge has a few more steps to help calculate this amount. See the diagram below.
If your 2021 provincial base tax is less than $ 4,874, you don’t pay a surcharge. If your provincial base tax is between $ 4,874 and $ 6,237, you’ll pay 20% on the portion of provincial tax owed that is greater than $ 4,874. Eventually, when your base provincial tax exceeds $ 6,237, you’ll pay 20% of the provincial tax owed, which is between $ 4,874 and $ 6,237 (which is $ 272.60), plus 56% ( 36% + 20%) on the provincial tax portion of tax liability over $ 6,237. Fortunately, most personal tax programs determine this automatically.