Canada Tax Rates 2024

Income tax in Canada ranges from 15.00% to 33.00% in 2024. The 15.00% rate applies to low earners, while the top marginal rate of 33.00% applies to the highest income bracket. The estimated effective rate at average income is approximately 20.4%.

The standard corporate income tax rate in Canada is 26.50% as of 2024. This is above the global average corporate tax rate.

The standard VAT (Value Added Tax / GST) rate in Canada is 5.00%. Reduced rates typically apply to food, medicine, and other essential goods..

Capital gains tax in Canada is 26.70% in 2024. Dividend income is taxed at 26.76%.

In Canada, employees contribute 5.95% of their gross salary to social security. Employers contribute an additional 5.95%. These contributions typically cover pensions, healthcare, and unemployment insurance.

Canada does not currently levy a national inheritance or estate tax. Assets passed to heirs are generally not subject to a separate succession duty.

Canada has a moderate overall tax burden. The maximum combined income tax and employee social security rate reaches 39%.

The top income tax rate in Canada is 33.00%, compared to a Americas average of 34.1% among neighbouring countries. Canada taxes income at a lower rate than the regional average.

The effective tax rate is the actual percentage of income paid in tax — lower than the top marginal rate because lower brackets are taxed at lower rates. In Canada, the estimated effective income tax rate for an average earner is approximately 20.4% (2024), compared to the headline top rate of 33.00%. Adding employee social security of 5.95% gives a total effective burden of roughly 25.2% on gross pay.

Canada uses a progressive income tax system with rates ranging from 15.00% at the lowest bracket to 33.00% at the top bracket (2024). Each band is taxed at its own rate; you only pay the higher rate on the portion of income that falls into that bracket. The number and thresholds of brackets vary by country and are typically adjusted annually for inflation.

Dividend income in Canada is taxed at 26.76% (2024). This is lower than the top income tax rate of 33.00%, meaning dividend income is taxed more favourably than employment income. Withholding tax may also apply to dividends paid to non-residents.

In Canada, tax residency is typically determined by the number of days spent in the country (often 183 days per year) or by having a permanent home there. Tax residents are liable for income tax at the same rates as citizens — 15.00% to 33.00% — on their Canada-sourced or worldwide income depending on the tax regime. Non-residents are typically taxed only on income sourced within Canada. Canada has tax treaties with many countries to prevent double taxation.

Freelancers and self-employed individuals in Canada typically pay income tax at the same progressive rates as employees — 15.00% to 33.00% — on their net profit after allowable business expenses. Unlike employees who split social security with their employer, self-employed workers often pay both the employee (5.95%) and employer (5.95%) portions themselves, significantly increasing the total tax burden. Self-employed workers are usually required to file a self-assessment tax return and make advance tax payments during the year.

Canada does not currently levy a national wealth or net worth tax. Assets are taxed when sold (capital gains tax) or on income generated (dividends, rent), but simply holding wealth does not trigger an annual tax.

The standard income tax return filing deadline in Canada is April 30. Extensions are sometimes available but must be requested in advance. Filing late typically incurs interest charges and penalties. Most countries require employees whose tax is fully withheld at source to file only if they have additional income, deductions to claim, or earned above a threshold.