Question 1

How much tax do I pay on my salary in Canada?

Accepted Answer

Canada uses a progressive tax system with both federal and provincial brackets. Federal rates for 2026 range from 15% on the first $57,375 up to 33% on income over $220,000. Provincial rates vary widely: Alberta has a flat 10% on the first $148,269, while Nova Scotia starts at 8.79% and goes up to 21%. Your total tax depends on which province you live in and your taxable income after deductions like the basic personal amount.

Question 2

What is CPP2 and how does it affect my pay?

Accepted Answer

CPP2 (second additional CPP contribution) was introduced in 2024 and applies to earnings between the first CPP ceiling ($73,200) and a second ceiling ($81,200 for 2026). The employee rate is 4% on earnings in that range, meaning a maximum additional contribution of about $320 per year. CPP2 only affects employees earning above $73,200.

Question 3

How is take-home pay calculated in Canada?

Accepted Answer

Take-home pay is calculated by subtracting all mandatory deductions from your gross salary. The deductions include: federal income tax (15-33%), provincial income tax (varies by province), CPP contributions (5.95% up to $73,200), CPP2 contributions (4% on earnings between $73,200 and $81,200), and EI premiums (1.64% up to $65,700, or 1.31% in Quebec plus QPIP). The basic personal amount at both federal and provincial levels reduces your tax payable.

Question 4

Do provincial taxes vary significantly across Canada?

Accepted Answer

Yes, provincial taxes vary dramatically. Alberta has the lowest rates with a flat 10% on the first $148,269, while Nova Scotia has some of the highest rates reaching 21% on income over $150,000. Nunavut has the lowest entry rate at 4%, while Quebec has a top rate of 25.75%. On a $100,000 salary, provincial tax can range from about $6,000 in Alberta to over $14,000 in Quebec, making province of residence a significant factor in take-home pay.

Question 5

What is the basic personal amount in Canada for 2026?

Accepted Answer

The federal basic personal amount for 2026 is $16,129, meaning you pay no federal tax on the first $16,129 of income. Each province also has its own basic personal amount: Alberta is the highest at $21,885, while Nova Scotia is the lowest at $8,481. The basic personal amount is applied as a non-refundable tax credit at the lowest tax rate, reducing your total tax payable.

Income Range	Federal Rate	Tax on Bracket
$0 - $57,375	15%	$8,606
$57,375 - $114,750	20.5%	$11,762
$114,750 - $158,468	26%	$11,367
$158,468 - $220,000	29%	$17,844
Over $220,000	33%	Varies

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