Income tax · Guide
Canada tax brackets 2026: will a raise reduce your take-home pay?
A higher federal rate applies only to the income inside that bracket—not to your entire salary.
How the brackets work
For 2026, the federal rates are 14% up to $58,523; 20.5% on the next portion up to $117,045; 26% up to $181,440; 29% up to $258,482; and 33% above that. Moving up a bracket does not re-tax the earlier portions at the new rate.
A simple example
On $60,000 of taxable income, the first $58,523 is calculated at 14% and the remaining $1,477 at 20.5%. That gives $8,496.01 before federal credits and other adjustments. This is not the final tax bill.
What this means for you
Your marginal rate describes tax on an additional dollar. Your average rate describes tax across all your income. Provincial tax, credits and income-tested benefits also affect the final result.