Provincial tax is the income tax collected by each province or territory in Canada. In addition to federal tax, Canadians pay provincial or territorial tax to fund local services such as healthcare, education, and transportation.
How It Works
Each province sets its own tax brackets and rates, which apply to taxable income after federal taxes are calculated. Some provinces have surtaxes or credits that further adjust the amount of tax owed.
Why It Matters
- Local funding: Supports essential services like healthcare, education, and infrastructure within the province.
- Varied rates: Tax rates differ across provinces, meaning two people with the same income could owe different amounts depending on where they live.
Final Thoughts
Provincial tax, combined with federal tax, makes up your total income tax. Understanding both levels ensures accurate planning for your net income and tax obligations.