How is the federal/provincial tax determined using the income tax deductions table?

The federal and provincial taxes are determined based on the gross or total income before any deductions, such as the CPF contributions. The income tax deductions table provides tax brackets that classify different levels of income and indicate the corresponding tax rates. To calculate the taxes owed, you need to identify the tax bracket into which the gross income falls. Each portion of the income is taxed at the rate prescribed for its bracket, which may include a combination of federal and provincial rates depending on where you reside.

First, calculate the total annual income to find the applicable tax rate for both the federal and provincial scales. Each province has different rates, so it’s important to use the correct table from the Canadian Revenue Agency or provincial tax authority. The tax owed is then the sum of applying each rate to the portion of income that falls within each bracket. Some regions may also apply personal tax credits, which can reduce the amount of tax owed. It’s essential to consult the most current tax tables as they can be updated annually based on inflation and policy changes.