Understanding Canada’s 2024 Tax Brackets: A Simple Guide

Introduction

Taxes can be confusing. However, getting more insight into tax brackets can help with tax filing. In Canada, your income will be taxed by both federal and provincial governments. In this article, we learn more about tax brackets and how it works.
Key Takeaways

Description	Details
Tax Brackets	Different income ranges which taxed at different rates.
Federal Rates (2024)	Starting from 15% to 33% tax rates based on income.
Ontario Rates (2024)	Starting from 5.05% to 13.16% tax rates based on income.
Calculation Steps	1. Figure out taxable income. 2. Apply federal rates. 3. Apply provincial rates. 4. Sum up the taxes.

What Are Tax Brackets?
Tax brackets are ranges of income for which there are specific tax rates.
So, your income will be taxed under different tax brackets according to the range of income and each bracket involves a different tax rate.
This shows that when your income increases, your tax rates also increase under different brackets.
For Provincial taxes, we will consider Ontario Tax Rules for this blog.
Federal Tax Brackets for 2024
For 2024, the federal tax brackets in Canada are as follows:

Income Range	Federal Tax Rate
Up to $55,867	15%
$55,867 - $111,733	20.5%
$111,733 - $173,205	26%
$173,205 - $246,752	29%
Over $246,752	33%

Provincial Tax Brackets for 2024
In Canada, each province has its own tax rates and brackets.
Here is a tax bracket of Ontario showing the provincial tax rates for 2024.
·        There is a 5.05% tax rate on the first $47,630 of taxable income
·        There is a 9.15% tax rate on taxable income over $47,630 up to $95,259
·        There is an 11.16% tax rate on taxable income over $95,259 up to $150,000
·        There is a 12.16% tax rate on taxable income over $150,000 up to $220,000
·        There is a 13.16% tax rate on taxable income over $220,000
Here are tax brackets for both federal and Ontario Tax Rates.

Taxable Income	Federal Tax Rate	Ontario Tax Rate
Up to $47,630	15%	5.05%
$47,631 - $55,867	15%	9.15%
$55,868 - $95,259	20.5%	9.15%
$95,260 - $111,733	20.5%	11.16%
$111,734 - $150,000	26%	11.16%
$150,001 - $173,205	26%	12.16%
$173,206 - $220,000	29%	12.16%
$220,001 - $246,752	29%	13.16%
Over $246,752	33%	13.16%

How to Calculate Your Taxes
1.      Figure out Your Taxable Income: (Total income) -  (Any deductions) = Taxable Income.
2.     Use the federal tax brackets to calculate the federal tax on your income.
3.     Use your province’s tax brackets to calculate the provincial tax.
4.    Combine both the federal and provincial taxes to get your total tax payable.
Calculate Your Taxes - Steps
Here we will use one example and calculate tax rates using federal and provincial (Ontario) tax brackets. Assume that you earn $80,000 in 2024.
1. Figure out Your Taxable Income
if you earned $80,000 in 2024 and had $5,000 in deductions, your taxable income would be:
·       $80,000 − $5,000 = $75,000
2. Use Federal Tax Rates
We will calculate tax on $75,000 using the federal tax brackets for 2024.
·        15% on the first $55,867. I.e., $55,867 × 0.15 = $8,380
·        20.5% on the remaining amount of ($75,000 - $55,867 =) $19,133. I.e., $19,133×0.205=$3,922
·        Total federal tax: $8,380.05 + $3,922.27= $12,302
3. Use Provincial Tax Rates
We will calculate tax on $75,000 using Ontario tax brackets for 2024.
·        5.05% on the first $47,630. I.e., $47,630 × 0.0505 = $2,404.32
·        9.15% on the left amount of ($75,000 - $47,630 =) $27,370. I.e., $27,370 × 0.0915 = $2,505.36
·        Total provincial tax: $2,404.32 + $2,505.36 = $4,909.68
4. Combine Taxes
Combine both federal and provincial taxes.
·       Total payable Tax: $12,302.32+$4,909.68=$17,212
So, following all tax brackets you will pay approximately $17,212 in total taxes for the year 2024.
Conclusion
You will feel less stress when you know your income tax brackets. This can help you plan your finances more effectively. You can file your taxes more confidently and potentially save money. Always remember to count both federal and provincial taxes for your province.

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