A person's marginal tax rate is the
tax rate that will be applied to the next dollar earned. This is
quite different from the average tax rate, which will be much lower. The Detailed
Canadian
Income Tax & RRSP Savings Calculators displays the average tax rate,
near the bottom of the calculator. If an RRSP deduction amount is entered
in the calculator, it will also display the savings from the RRSP
deduction. To determine your marginal tax rate using the calculator, put
your actual RRSP deduction into "other deductions", and enter $10 in
the RRSP deduction field. The % tax savings is your marginal tax rate.
The marginal tax rates on
capital gains and Canadian dividend income are
lower than on other types of income, because:
only 50% of capital gains
are included in taxable income - our tax
rate tables show the marginal tax rate on the next dollar of
the actual amount of capital gains earned.
Canadian eligible dividends:
138% of these dividends are included in
taxable income, but a dividend
tax credit is deducted from taxes payable.
Canadian non-eligible dividends (aka regular dividends, or small
business dividends). The amount of these dividends included in
income is:
To see the marginal
tax rates for different types of income for each tax bracket, see the marginal
tax rate table for your
province or territory. These tables display the marginal tax
rates for a single person with only the basic personal amount tax
credit.
You can also see marginal tax rates for all
provinces and territories for capital gains, Canadian eligible and
non-eligible dividends and other income using the very simple Basic
Tax Calculator. However, this won't be your actual marginal tax
rate if you have any tax credits besides the basic personal amount and
dividend tax credits.
Tax Tip: Use the Canadian Income Tax
& RRSP Savings Calculator to help determine your own marginal tax rate.