![]() The first $50,197 you made is still taxed at 15%, and the next $50,195 after that is taxed at 20.5%. If you get a big raise and now earn $105,000, only $4,608 of that income is taxed at 26%. This applies to all the higher tax brackets, too. The first $50,197 you made will still be taxed at 15%. So if you made $52,000, only $1,803 of it will be taxed at 20.5%. Well, we’ve got good news - this is wrong! Only the additional amount of taxable income you made in the next bracket gets taxed at the higher rate. A lot of people think that once they move up in rates, all of their taxable income falls into this higher rate. But wait, your income went above $50,197! So, are you in a new tax bracket? Let’s say you work full-time all year, and earn $52,000. ![]() Here’s what happens when you move up a bracket. Now, what if you also worked full-time in the summer, and your income at the end of the year increased to $30,000? Even though you made more money, you still fall into the 15% bracket because the limit is $50,197. Your income would be in the first bracket, and your tax rate would be 15%. Let’s say you’re a student who worked part-time over the winter and spring, and you made $10,000. The tax rates are split up into ‘brackets’, and the taxes you pay are based on which of the tax brackets your income falls into, and where you live in Canada.ĭon’t worry, to help you understand, let’s show you how the federal tax rates in 2022 could have affected your taxes. ![]() Tax rates are the percentage of income you pay to federal and provincial, or territorial, governments when you do your taxes.Ĭanada’s tax system uses ‘marginal’ tax rates, which means you pay more tax as your income increases. We’ll show you how tax rates in Canada work, and clear up some of the confusion about them. Whether you’re starting your first part-time job as a student, starting a full-time job, or just thinking about a pay raise - we’re here to help. Narrator: Have you been offered a new job, or a raise at work? Did someone say: “watch out for those tax rates and tax brackets - you’ll make less money”? Are you confused? Well, don’t fret!
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