Understanding Tax Brackets

by in Tax Advice Information and Updates
To understand tax brackets, we must understand a few concepts:

  • Everyone has a Federal and Provincial Personal Exemption.  This means that you can make a certain amount of income without paying any tax.  This amount may change from year to year.

  • The Tax Bracket that you are in is not the tax rate you pay on all your income.  You pay this rate on the income that is in this tax bracket.  Therefore, you pay different tax rates on different portions of your income.

  • The Tax Bracket that you are in is calculated by your taxable income, not your total income or net income.

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