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Canadian Income Tax Guide 2025 — Federal, Provincial, CPP and EI

Federal brackets, provincial rates for all 10 provinces, CPP, EI and RRSP explained.

📖 5 min read  ·  Updated May 2025  ·  FinanceCanadaTax

Canada has a two-layer income tax system: federal tax (same rate for all provinces) plus provincial tax (different for each province). Here is a complete guide for 2025.

2025 Federal Income Tax Brackets

  • 15% on the first $57,375
  • 20.5% on $57,376–$114,750
  • 26% on $114,751–$177,882
  • 29% on $177,883–$253,414
  • 33% over $253,414

The basic personal amount (BPA) is $16,129 — your first $16,129 of income is effectively tax-free at the federal level.

Example — $80,000 in Ontario: Federal tax ≈ $11,400. Ontario provincial tax ≈ $6,200. CPP ≈ $3,800. EI ≈ $1,050. Total deductions ≈ $22,450. Take-home ≈ $57,550.

Provincial Income Tax

Provincial tax adds 8–22% on top of federal tax depending on province and income. Alberta has the lowest overall tax burden (flat 10% above $148K). Quebec has the highest marginal rate (25.75% at the top bracket). Ontario falls in the middle at 13.16% top marginal rate. Same $80,000 salary nets $57,550 in Ontario vs approximately $60,000 in Alberta.

CPP — Canada Pension Plan

CPP rate: 5.95% on earnings between $3,500 and $68,500 (2025). Maximum annual contribution: approximately $3,867. There is also a second earnings ceiling (CPP2) at 4% on income between $68,500 and $73,200. Employers match employee CPP contributions.

EI — Employment Insurance

EI rate: 1.64% on insurable earnings up to $65,700 (2025). Maximum annual premium: approximately $1,077. EI makes you eligible for benefits during unemployment, parental leave and illness. Quebec residents pay a lower rate as they contribute to QPIP separately.

RRSP — Reduce Your Tax Bill

RRSP (Registered Retirement Savings Plan) contributions are tax-deductible — they reduce your taxable income dollar for dollar. Contribution room is 18% of prior year earned income, up to a maximum of $31,560 for 2025. Contributing to an RRSP is one of the most effective ways to reduce current-year tax in Canada.

Calculate your exact take-home pay for any Canadian province.

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Frequently Asked Questions

What are the Canadian federal tax brackets for 2025?
15% on first $57,375; 20.5% on $57,376–$114,750; 26% on $114,751–$177,882; 29% on $177,883–$253,414; 33% over $253,414. Each rate applies only to income within that bracket.
Which Canadian province has the lowest income tax?
Alberta has the lowest overall provincial income tax — a flat 10% rate on taxable income above the basic personal amount of $21,003. Combined with federal tax, Alberta residents pay significantly less than residents of Quebec, Ontario or British Columbia at most income levels.
How does RRSP reduce taxes?
RRSP contributions are deducted from taxable income. Contributing $10,000 at a 33% marginal rate saves $3,300 in tax that year. Investments grow tax-free inside the RRSP. Withdrawals in retirement are taxed as income — typically at a lower marginal rate than during working years.
What is the CPP contribution for 2025?
5.95% on earnings between $3,500 and $68,500. Maximum employee contribution approximately $3,867. Plus CPP2: 4% on $68,500–$73,200 (approximately $185 additional). Employers match the base CPP contribution.
Does Quebec have different deductions?
Yes — Quebec has separate provincial tax with rates from 14–25.75%, its own QPP (Quebec Pension Plan) instead of CPP, and the Quebec Parental Insurance Plan (QPIP) for parental benefits. Quebec residents file two separate tax returns: federal (CRA) and provincial (Revenu Québec).