In Canada, we operate under a marginal tax rate system. This system was put in place to help define how much tax you need to pay on your annual income. You can be taxed by the federal government and the provincial government through this kind of system and each government will have different dollar values and percentages defining each bracket.
How it works is, your total annual income will sit within the margins of specific tax brackets and you will be required to pay the associated tax percentage on the number of dollars sitting within each bracket.
Knowing which tax bracket your income falls into can be really helpful in figuring out how much of your income you actually get to spend and how much you should keep aside to help pay for your taxes. Also, the tax rates can change so it is helpful to have a financial planner by your side to help you with tax planning each year. Click here to book your free consultation today.