Marginal vs Average Tax Rate
These two numbers get used interchangeably and they mean very different things. Confusing them is why people believe a raise can leave them worse off — in Canada, it cannot.
The difference, on a real salary
On $80,000 in Ontario you pay $14,128 of income tax — an average rate of 17.7%. But your next dollar is taxed at 28.5%. The average is dragged down by the lower brackets and your credits; the marginal rate is the one that matters when you are weighing a raise, overtime or an RRSP contribution.
Why your marginal rate is often not a published bracket rate
Bracket tables tell only part of the story. Ontario’s surtax adds to the rate above certain tax amounts, the Ontario Health Premium steps up at fixed income points, and the federal and Manitoba basic personal amounts shrink as income rises. Each of those pushes your true marginal rate above the published bracket. We compute the marginal rate on every page by measuring the tax on the next dollar rather than reading it off a table.
Can a raise leave you worse off?
Not through income tax. Because each rate applies only to the income inside its band, more gross always means more net. Our calculations are checked against that rule across every salary and every jurisdiction. Income-tested benefits are a separate matter and are outside what this site models.
Common questions
What is my marginal tax rate?
The share of your next dollar of income that goes to tax. It is shown on every salary page on this site, computed rather than read off a bracket table.
Which rate should I use to work out an RRSP contribution?
Your marginal rate, because an RRSP contribution reduces income from the top down.
Sources: Canada Revenue Agency — T4127 Payroll Deductions Formulas (122nd and 123rd editions, 2026) and the published 2026 federal, provincial and territorial rate tables; Revenu Québec — 2026 income tax rates and the 2026 source-deduction parameters. Rates verified 9 August 2026.
Figures are computed from those published rates by our own engine, which is validated against the CRA’s Payroll Deductions Online Calculator. See how we calculate.