Canada

Canada uses a progressive federal income tax system with five brackets, ranging from 15% on the first CAD 57,375 to 33% on income above CAD 252,752 for the 2025 tax year. In addition, each province and territory imposes its own income tax with separate brackets, resulting in combined top marginal rates that vary from about 44% in Nunavut to over 54% in Nova Scotia. The Canada Pension Plan (CPP) requires contributions from both employees and employers. The employee contribution rate is 5.95% on pensionable earnings between the basic exemption ($3,500) and the first ceiling ($71,300). A second additional CPP (CPP2) applies at 4% on earnings between the first and second ceilings ($79,400). Employment Insurance premiums are 1.64% of insurable earnings up to $65,700. Canada offers several tax-advantaged savings vehicles. The Registered Retirement Savings Plan (RRSP) allows tax-deductible contributions up to 18% of prior-year earned income, capped at $32,490 for 2025. The Tax-Free Savings Account (TFSA) permits after-tax contributions with tax-free growth and withdrawals, with an annual contribution limit of $7,000. The First Home Savings Account (FHSA) combines features of both. Capital gains in Canada are taxed at a 50% inclusion rate for the first $250,000 of annual gains and 66.67% beyond that threshold. The Goods and Services Tax (GST) is 5% federally, with most provinces adding a Provincial Sales Tax (PST) or combining with GST into a Harmonized Sales Tax (HST) of 13-15%. Canada has tax treaties with over 90 countries. Unlike the US, Canada does not tax citizens living abroad who have severed their residential ties. The corporate tax rate is 15% federally, with provincial rates of 8-16% layered on top.