Federal income tax rates and brackets
Tax payable under this Part (federal rates)
Section 117 sets the federal income tax rate schedule — the brackets and rates applied to taxable income to compute basic federal tax before credits.
Plain-language explanation
Section 117 contains the federal tax rate schedule. It sets out how much federal tax you owe based on your taxable income, before applying non-refundable credits.
2026 federal brackets: | Taxable income | Federal rate | |---|---| | Up to $58,523 | 14% | | $58,524 – $117,020 | 20.5% | | $117,021 – $162,383 | 26% | | $162,384 – $231,425 | 29% | | Over $231,425 | 33% |
How marginal rates work: The rates are *marginal* — only the income within each bracket is taxed at that bracket's rate. If you earn $130,000, you do not pay 26% on all $130,000. You pay 14% on the first $58,523, 20.5% on the next $58,497, and 26% on the remaining $12,980.
After-credits rate: Section 117 produces your basic federal tax before non-refundable credits. The basic personal amount credit (s.118) immediately reduces your tax by 14% × $16,452 (for most taxpayers in 2026). Your effective federal rate ends up lower than the bracket rate shown above.
Example
David earns $100,000 in Ontario. Federal tax (s.117): 14% × $58,523 = $8,193 + 20.5% × $41,477 = $8,503 → total $16,696. Less BPA credit: 14% × $16,452 = $2,303. Net federal tax: ~$14,393.
Amendment history
Significant changes to this provision. Older versions help you understand rules that applied in prior tax years.
Lowest federal bracket rate cut from 15% to 14%, effective July 1, 2025. CRA uses a blended 14.5% rate for the full 2025 tax year. Starting 2026, the rate is a flat 14%.
Before
15% on income up to $57,375 (2025 brackets)
After
14% on income up to $58,523 (2026 brackets, fully 14%)
Common questions
What are the 2026 federal tax brackets? +
14% on the first $58,523; 20.5% on $58,524–$117,020; 26% on $117,021–$162,383; 29% on $162,384–$231,425; 33% over $231,425. Brackets are indexed to inflation each year.
Did the federal tax rate change in 2025? +
Yes. The lowest federal bracket rate was reduced from 15% to 14%, effective July 1, 2025. For the 2025 tax year, CRA uses a blended 14.5% rate. From 2026, the rate is a flat 14%.
How do I calculate my actual effective federal tax rate? +
Divide your total federal tax (after credits) by your total income. Most people's effective rate is significantly below their marginal rate because lower-income layers are taxed at lower rates and credits reduce tax further.
Key terms
Related calculators
Source: Income Tax Act, RSC 1985, c. 1 (5th Supp.), section 117. — Read the official text on Justice Canada
These summaries are for educational purposes only and do not constitute legal or tax advice. Speak with a CPA for advice on your specific situation.