Question 1

How is income tax calculated in Canada?

Accepted Answer

Canada uses a progressive tax system. You pay federal tax plus provincial/territorial tax. Each has its own brackets — you only pay the higher rate on income above each threshold, not on your entire income.

Question 2

What is the Basic Personal Amount (BPA)?

Accepted Answer

The BPA is the amount of income you can earn before paying any tax. For 2026, the federal BPA is up to $16,452. Each province also has its own BPA. It's applied as a non-refundable tax credit.

Question 3

What is the Ontario Health Premium?

Accepted Answer

The Ontario Health Premium is a graduated levy on taxable income over $20,000. It ranges from $0 to a maximum of $900/year. It's separate from income tax and helps fund Ontario's health care system.

Question 4

Does Ontario have a surtax?

Accepted Answer

Yes. Ontario adds a surtax of 20% on basic provincial tax over $5,315 plus 36% on basic provincial tax over $6,802. This effectively increases the marginal rate for higher earners.

From	To	Rate
$0.00	$52,886.00	5.1%
$52,886.00	$105,775.00	9.2%
$105,775.00	$150,000.00	11.2%
$150,000.00	$220,000.00	12.2%
$220,000.00	and above	13.2%