Have you wondered, how much do Canadians pay in taxes? Here’s quick summary of how to figure out how our tax system affects you.
When you count on every penny from your paycheque to make ends meet, it almost hurts to see what is left over after taxes are taken out. As Canadians (and Ontarians) we can agree that our tax dollars contribute to the quality of life we enjoy, but wouldn’t it be nice to know the specific amount coming out of your pay?
The tax bracket (marginal tax rate) you are in does not mean you will pay a flat rate amount across the board. Your income may span a number of tax levels and you are taxed a different percentage on each level. You 2017 tax bracket is determined as follows:
Anyone with a desire to do complex math calculations can determine their exact tax bracket, but using your “effective tax rate” is a quick method for figuring what you can expect to pay.
But wait, there’s more…
You pay more than federal taxes alone. You may also pay:
Your effective tax rate identifies how much you are taxed, on average, on your total income. Basically, you divide your taxes paid by your income to get a percentage.
For example, say your income is $30,000 a year and after all of your tax benefit deductions you pay $3,000 in federal taxes. Your effective tax rate is 10%.
$3,000 / $30,000 x 100 = 10%
As we mentioned earlier every penny matters, especially when your income vs. expenses forces you to live paycheque to paycheque. Knowing what you will be taxed helps you plan ahead to cover your bills.
If you do find yourself with a temporary cash crisis, we have timely, manageable solutions. Contact us to learn more.