Taxable Income: New Canada Income Tax Brackets for 2025

With the rising cost of living, tax refunds have become more important than ever, with 25% of Canadians using it to pay off debts including credit cards and loans.

According to the CRA, the average tax refund amount in 2025 was $2,295, as of January 27. Starting July 1, 2025, Canada’s lowest federal income tax rate will drop from 15% to 14%, which works out to an effective 14.5% rate for the year. In addition, the basic personal amount (the income you can earn federally before paying tax) has been inflation-adjusted to $16,129 for 2025. Together, these changes mean many Canadians could see lower tax bills—or larger refunds—depending on their income and deductions.

In most cases, employees file their own tax returns, but HR professionals still play a key role in ensuring tax bracket information is up to date and accurate. HR’s expertise on this subject not only safeguards employee finances but can also help to build trust and confidence in the business and its ability to manage payroll responsibilities.

In this guide, we’ll discuss Canada income tax brackets in 2025 and outline what you need to know about income tax as an employer.

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What is income tax?

Income tax is the portion of an employee’s earnings that is paid to the government each year. In Canada, there’s a graduated income tax system, which means their tax rate depends on how much your employees earn.

Income tax is collected by the Canada Revenue Agency (CRA). It’s used to help fund important government services such as healthcare, the military and public education.

Canadian employers will deduct income tax from employee earnings during each pay period. Any deductions should be clearly displayed on pay stubs. Even though these deductions ensure that workers pay income tax, they still need to report their employment earnings and any other income they receive to the CRA via tax return. This can include other sources of taxable income, such as investment earnings, certain government benefits, pensions, or passive income.

The CRA uses tax returns to decide whether an employee paid enough tax on the income they generated in the past year. If they didn’t pay enough, they’ll need to submit the outstanding balance to the CRA. But if they paid too much, they’ll receive a tax refund.

Canada income tax brackets for 2025

It’s important for businesses to stay up to date with all income tax bracket information, so they can provide employees with accurate payroll and stay compliant with federal regulations.

Below, we provide you with all the information you need about Canada’s income tax brackets for 2025. This includes both the federal income tax rates and provincial and territorial rates. Use this information to ensure your payroll tax processes remain compliant with the latest government updates.

Federal income tax rates for 2025
Tax rate
Taxable Income Threshold
14.5%
on taxable income that is $57,375 or less, plus
20.5%
on taxable income over $57,375 up to $114,750, plus
26%
on taxable income that exceeds $114,750 up to $177,882, plus
29%
on taxable income over $177,882 up to $253,414, plus
33%
on taxable income that exceeds $253,414
Quebec income tax rates for 2025
Tax rate
Taxable Income Threshold
14%
$53,255 or less
19%
Over $53,255 but less than $106,495
24%
Over $106,495 but less than $129,590
25.75%
Over $129,590

Provincial and territorial income tax rates in 2025

Did you know every province and territory has different rates? And these may not match the overall federal income tax rates. Business owners and HR professionals should be aware of both provincial and territorial income tax rates in 2025.

Find all the information you need about the tax rates across Canada below.

Newfoundland and Labrador income tax rates for 2025
Tax rate
Taxable Income Threshold
8.7%
on taxable income less than or equal to $44,192, plus
14.5%
on taxable income that’s more than $44,192 up to $88,382, plus
15.8%
on taxable income that exceeds $88,382 up to $157,792, plus
17.8%
on taxable income that exceeds $157,792 up to $220,910, plus
19.8%
on taxable income that’s more than $220,910 up to $282,214, plus
20.8%
on taxable income that exceeds $282,214 up to $564,429, plus
21.3%
on taxable income that’s more than $564,429 up to $1,128,858, plus
21.8%
on taxable income over $1,128,858
Prince Edward Island income tax rates for 2025
Tax rate
Taxable Income Threshold
9.5%
on taxable income of $33,328 or less, plus
13.47%
on taxable income that exceeds $33,328 up to $64,656, plus
16.6%
on taxable income that’s more than $64,656 up to $105,000, plus
17.62%
on taxable income that exceeds $105,000 up to $140,000, plus
19%
on taxable income over $140,000
Nova Scotia income tax rates for 2025
Tax rate
Taxable Income Threshold
8.79%
on taxable income equal to or less than $30,507, plus
14.95%
on taxable income that exceeds $30,507 up to $61,015, plus
16.67%
on taxable income that’s more than $61,015 up to $95,883, plus
17.5%
on taxable income that exceeds $95,883 up to $154,650, plus
21%
on taxable income over $154,650
New Brunswick income tax rates for 2025
Tax rate
Taxable Income Threshold
9.4%
on taxable income equal to or less than $51,306, plus
14%
on taxable income that exceeds $51,306 up to $102,614, plus
16%
on taxable income that’s more than $102,614 up to $190,060, plus
19.5%
on taxable income over $190,060
Ontario income tax rates for 2025
Tax rate
Taxable Income Threshold
5.05%
on taxable income below or equal to $52,886, plus
9.15%
on taxable income over $52,886 up to $105,775, plus
11.16%
on taxable income more than $105,775 up to $150,000, plus
12.16%
on taxable income over $150,000 up to $220,000, plus
13.16%
on taxable income over $220,000
Manitoba income tax rates for 2025
Tax rate
Taxable Income Threshold
10.8%
on taxable income equal to or below $47,564, plus
12.75%
on taxable income than exceeds $47,564 up to $101,200, plus
17.4%
on taxable income over $101,200
Saskatchewan income tax rates for 2025
Tax rate
Taxable Income Threshold
10.5%
on taxable income below or equal to $53,463, plus
12.5%
on taxable income that exceeds $53,463 up to $152,750, plus
14.5%
on taxable income over $152,750
Alberta income tax rates for 2025
Tax rate
Taxable Income Threshold
8%
on taxable income that is $60,000 or less, plus
10%
on taxable income that exceeds $60,000 up to $151,234, plus
12%
on taxable income over $151,234 up to $181,481, plus
13%
on taxable income that exceeds $181,481 up to $241,974, plus
14%
on taxable income that’s more than $241,974 up to $362,961, plus
15%
on taxable income over $362,961
British Columbia income tax rates for 2025
Tax rate
Taxable Income Threshold
5.06%
on taxable income below or equal to $49,279, plus
7.7%
on taxable income over $49,279 up to $98,560, plus
10.5%
on taxable income that exceeds $98,560 up to $113,158, plus
12.29%
on taxable income that’s over $113,158 up to $137,407, plus
14.7%
on taxable income that exceeds $137,407 up to $186,306, plus
16.8%
on taxable income that exceeds $186,306 up to $259,829, plus
20.5%
on taxable income over $259,829
Yukon income tax rates for 2025
Tax rate
Taxable Income Threshold
6.4%
on taxable income that is $57,375 or less, plus
9%
on taxable income over $57,375 up to $114,750, plus
10.9%
on taxable income that exceeds $114,750 up to $177,882, plus
12.8%
on taxable income that exceeds $177,882 up to $500,000, plus
15%
on taxable income over $500,000
Northwest Territories income tax rates for 2025
Tax rate
Taxable Income Threshold
5.9%
on taxable income that is or below $51,964, plus
8.6%
on taxable income that exceeds $51,964 up to $103,930, plus
12.2%
on taxable income that exceeds $103,930 up to $168,967, plus
14.05%
on taxable income over $168,967
Nunavut income tax rates for 2025
Tax rate
Taxable Income Threshold
4%
on taxable income below or equal to $54,707, plus
7%
on taxable income over $54,707 up to $109,413, plus
9%
on taxable income that exceeds $109,413 up to $177,881, plus
11.5%
on taxable income over $177,881

Why you should understand income tax as an employer

It’s essential that business owners, as well as HR teams, have a firm understanding of income tax and how it works in Canada. Here’s why:

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https://www.bamboohr.com/ca/blog/full-time-vs-part-time-hours
https://www.bamboohr.com/ca/blog/sick-leave
https://www.bamboohr.com/ca/blog/employment-insurance
https://www.bamboohr.com/ca/blog/minimum-wage