Income Tax Calculator In Canada 2024: Top 5 Picks & Reviews
Reviewed by Randolph Vialva, MBA
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Every year, Canadian residents must prepare and submit their income tax returns. The process can be complicated and time-consuming because there are several factors to consider, like deductions, credits, and income sources. Many enlist the services of a tax expert, while some are confident enough to file these taxes themselves.
Fortunately, for those who cannot afford professional services, you can simplify the process of filing taxes in Canada using an income tax calculator. This online tool makes it easy to estimate how much you will owe or receive at the end of the year. Since it is a crucial part of the tax preparation process, it is essential to choose a reliable calculator that produces accurate results and is up to date with the latest changes in taxation laws.
This article will talk about the best Canada income tax calculator for residents looking to file their taxes quickly and accurately. We’ll go over each tool’s features, ease of use, and other advantages it brings to taxpayers.
What Is Income Tax In Canada?
Income tax is a type of tax imposed by the government on individuals and private and public corporations. It is based on their total income, including employment income and additional income, investments, pensions, etc. The amount of taxes owed depends on your marginal tax rate (the percentage you are taxed) and other factors, such as deductions and credits (ex. dividend tax credit, basic personal tax credit, or first-time homebuyers tax credit), that can reduce your overall bill.
In Canada, the federal taxation system is managed by the Canada Revenue Agency (CRA). All Canadian taxpayers must file an annual income tax return to report their annual earnings and pay any taxes owed. Filing online is usually recommended since it’s faster than filing a paper return.
What Is an Income Tax Calculator?
An income tax calculator is an online tool used to estimate the amount of taxes you will owe or receive at the end of a given year based on your income and deductions. Many calculators allow you to enter your total income, deductions (like RRSP contributions), and credits (such as GST/HST). There are all kinds of income tax calculators online, so make sure you are using a Canada income tax calculator.
Once all the data is entered into the Canada income tax calculator, it will generate an estimated tax refund, tax deducted, or balance owed for the year. This makes it easy for taxpayers to get a good idea of how much money they can expect from their return before filing their taxes with the Canada Revenue Agency (CRA). Most tools can account for taxes for the current year and the previous year but rarely do you find one that can calculate for a future year. This is because taxation laws may change, based on the federal budget.
How Does Income Tax Calculator Work?
Canada income tax calculators are specially developed for tax purposes, meaning they use complex algorithms to calculate income taxes based on the information entered by users. They take into account factors like the current marginal tax rate, income, deductions, tax credits, and other tax-related variables to determine an individual’s estimated tax refund or balance owed.
The accuracy of the results depends on how accurately you have filled out all the information on your Canada income tax calculator. For example, you will need to enter your province of residence to get your provincial taxes.
Income Tax Brackets & Tax Rates In Canada
While a Canada income tax calculator will do most of the heavy lifting, you still need a thorough understanding of how the income tax brackets and tax rates in Canada work. This way, you can double-check the accuracy of the calculator’s results. A tax bracket is a range of income levels that are subject to a particular tax rate.
Here are the federal tax rates for 2022 based on the tax brackets:
- 15% on the first $50,197 of taxable income, plus
- 20.5% on the next $50,195 of taxable income (on the portion of taxable income over 50,197 up to $100,392), plus
- 26% on the next $55,233 of taxable income (on the portion of taxable income over $100,392 up to $155,625), plus
- 29% on the next $66,083 of taxable income (on the portion of taxable income over 155,625 up to $221,708), plus
- 33% of taxable income over $221,708
Provincial and territorial taxes also differ per region. For full details on the tax rates, you may visit the Canada Revenue Agency’s official website. For Quebec’s income tax rate, you may check Revenu Quebec.
5 Best Income Tax Calculator In Canada 2024
- TurboTax: Best Overall
- Talent.com: Best Free
- EY Tax Calculators: Best for Beginners
- Career Beacon: Best for Pension Income
- WOWA: Best for Self-Employed
Why Should You Use A Tax Calculator?
Computing your taxes manually requires a significant amount of time and effort and a certain level of understanding of the Canadian tax system. If you are a new Canadian resident, trying to learn the different rules and regulations that apply to your situation can be overwhelming. Even experienced taxpayers sometimes find it hard to keep up with the frequent changes in taxation laws.
For instance, taxes and benefits may differ for single residents and married couples. For your tax return, you need to indicate details like your marital status and common-law partner, to be eligible for benefits related to family and child care. Additionally, you have to consider your province. Different provinces offer specific benefits, like how Quebec offers the Quebec parental insurance plan.
This is where a Canada income tax calculator comes in handy. It simplifies the process of computing taxes by providing you with an estimate of your final tax bill without having to do any calculations yourself.
Moreover, a good Canada income tax calculator is updated frequently to reflect changes in the federal government taxation laws, so you can always rest assured that you’re using up-to-date information. This saves you from making costly mistakes and facing potential penalties down the line because of incorrect figures or misfiled paperwork.
Read more: The Best Tax Software In 2024
5 Best Income Tax Calculator In Canada 2024
TurboTax
TurboTax Canada is one of the most popular tax preparation services in the country. Its auto-fill features and easy-to-use interface make filing tax returns a simple task. The software also integrates with the CRA’s NETFILE, allowing you to file your taxes directly from TurboTax’s website conveniently.
- Auto-fill feature
- NETFILE certified
- Excellent support channels
- Free version only covers simple tax returns
- Pricier than other tax software
TurboTax is an online income tax software made by Intuit Canada. It is a massively popular choice of tool for Canadian taxpayers because of its features that make filing taxes a breeze. One notable feature is the Auto-Fill My Return which automatically collects information from your CRA My Account, including your T4s, RRSP contribution limit, and tax credits, such as the basic personal amount, you are eligible for.
TurboTax’s primary tools are available through its paid tiers, Deluxe ($20.99 per return), Premier ($34.99 per return), and Self-Employed ($49.99 per return). However, you can get a feel of the income tax calculator for free.
The free version allows users to calculate simple tax returns, which is perfect for DIY-ers who are confident about preparing their own tax documents. You can input loads of information, namely employment income (or employment earnings) or self-employment income, additional income, RRSP contribution, capital gains (for those who have capital property), capital losses, eligible dividends, and income taxes paid.
The calculator will then show you your federal tax, provincial tax, CPP (for CPP retirement pension), and EI premiums. It also displays the marginal tax rate and average tax rate.
Aside from providing a highly intuitive interface, TurboTax takes its beginner-friendly approach further by offering a robust support system. You can access an extensive learning hub of updated tax information, a community forum, and phone support if you upgrade to the paid plans.
Best of all, users can avail of the Assist & Review service, which lets them interact with a live tax expert who will go over your return before you file it. The service comes in Basic ($39.99), Deluxe ($69.99), and Premier ($89.99) tiers.
Talent.com
Talent.com’s free tax income calculator is a decent option for DIY tax filers who don’t want to spend on software or professional services. It is designed in a straightforward manner and provides an approximate figure of your tax liability or refundable amount for the year.
- Quick tax return estimates
- Visual aids
- Calculate per province
- Limited tax input fields
- Simple tax returns only
Talent.com is primarily a job-search platform, so it may not have as many features as dedicated tax calculators. Nevertheless, it is still a handy tool when you are in a rush and need to quickly estimate your tax liability or refundable amount.
For this income tax calculator, all you need to enter is your gross income (with options to choose per annual, monthly, etc.) and your province. Then it will automatically calculate your federal tax deduction, provincial tax reduction, CPP deduction, and EI deduction. You will also be shown information about the marginal tax rate and average tax rate.
However, this is only reserved for simple tax returns. Talent.com does not provide more comprehensive calculations for complex filings, such as when you have multiple jobs or investments.
EY Tax Calculators
Ernst & Young’s tax calculators are a good starting point for first-time tax return filers. Its quick personal tax calculator and RRSP savings calculator give users a general idea of their tax liability and potential savings. Both are updated with the latest tax information too.
- Tax overview per province
- Quick and simple
- Calculate RRSP savings
- Non-refundable tax credits not included
- Provincial health premiums also excluded
The EY personal tax calculator is another free and straightforward tool Canadian taxpayers use. After you input your income, it will calculate your combined federal and provincial tax bill. Your tax return is presented in a table that consists of the tax payable, after-tax income, average tax rate, and marginal tax rate. It also shows the marginal rate on both eligible dividends and ineligible dividends for your dividend tax credit.
What’s nice about this calculator is that it automatically breaks down your income tax per province. So you can compare how much you’ll need to pay in different provinces, which can help you decide to move to a particular province for lower taxes.
EY also provides an RRSP savings calculator that shows you the tax savings you receive from making an RRSP contribution. It is an excellent tool for Canadians who want to know how to maximize their tax refunds by contributing to an RRSP.
Career Beacon
Career Beacon is another job board website in Canada that offers a free income tax calculator. It features a variety of fields for you to input information. Unlike other free calculators, however, this one can calculate your pension income.
- Taxes for pension income
- Pie graph results
- Returns per province
- No additional features
- Not supported by CRA
With Career Beacon’s Canada income tax calculator, you can enter information about your salary and work hours per day. Then, you can add details about your bonuses, commissions, special benefits, and even RRSP. The results lay out your taxes in table form and pie graph form. You can spot your net pay, federal tax, provincial tax, marginal tax rate, average tax rate, and the like.
If you are already a retired member, you can use this calculator to know your taxes based on your pension income, which can include old age security. There is a dedicated field to input your pension amount. Of course, pensions would differ per province too. For instance, Quebec residents would go for the Quebec pension plan (QPP) instead of the CPP. Luckily, this calculator also accounts for your province.
WOWA
WOWA is one of the few online income tax calculators that can calculate self-employed taxes for free. It is easy to use since all you need to do is enter your income and deductions into the calculator. The tool then instantly produces a precise estimate of how much tax you will owe or receive at the end of the year.
- Calculate self-employed taxes
- Input deductions
- Calculate per province
- No other features
- Not CRA-certified
While many free online tax calculators only allow you to share limited information, WOWA lets you enter several fields, including other income (aside from employment income), income deductions like RRSP contributions, capital gains, and even dividend tax credits.
Before hitting the enter button, you can also select whether you are entering employee income or self-employment income. The calculator can give estimates for income taxes for the previous year and as far back as 2020. The results will break down your total taxes, which include income tax, EI premiums, and CPP contributions. You will also see the marginal tax rate and average tax rate.
Final Thoughts
For those who want to file their taxes online, an income tax calculator is a helpful tool to take advantage of. It speeds up the process of filing taxes and ensures that the calculation is accurate. Most free online income tax calculators are sufficient for simple tax returns, but if you need help with more complex filings, you should consider using one of the paid services available.
Frequently Asked Questions (FAQs)
Yes. An income tax calculator can help you estimate the amount of taxes you owe based on the marginal tax rate and factors like non-refundable tax credits, deductions, and special benefits, and prepare your return more efficiently. It also allows you to plan ahead by seeing how different scenarios may affect your liability or refund.
Most of them are, but the more robust calculators may require a fee. Be sure to check before signing up for one of these services.
Yes, a pension income, whether it is CPP or OAS (old age security) is considered a taxable income in Canada. Even if you are a retired member, you will still need to report this income on your tax return.
Yes, self-employed residents in Canada are required to pay taxes on their income. Depending on the self-employment income earned and other factors, they may need to make quarterly payments or submit a yearly tax return.
A marginal tax rate is the tax rate applied to an individual’s income above a certain threshold. In Canada, the federal government has established marginal tax rates which are used to calculate how much income tax should be paid. The higher your taxable income, the higher your marginal tax rate will be. Depending on where you live in Canada, the tax rate can vary slightly as provinces and territories have their own provincial/territorial taxes that must also be taken into account when calculating taxes owed.
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+ 5 sources
- Canada Revenue Agency. Canadian income tax rates for individuals – current and previous years – Canada.ca. Canada.ca. Published 2018. Accessed December 13, 2022. https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html
- Income Tax Rates. Revenu Québec. Accessed December 13, 2022. https://www.revenuquebec.ca/en/citizens/income-tax-return/completing-your-income-tax-return/income-tax-rates/
- Canada Revenue Agency. Canada Revenue Agency. Canada.ca. Published 2019. Accessed December 13, 2022. https://www.canada.ca/en/revenue-agency.html
- Canada income tax calculator 2020 | TurboTax® 2020 Canada. turbotax.intuit.ca. Accessed December 13, 2022. https://turbotax.intuit.ca/tax-resources/canada-income-tax-calculator.jsp
- Income Tax Calculator 2021 – Canada – Salary After Tax. Talent.com. Accessed December 13, 2022. https://ca.talent.com/tax-calculator