1. What is Federal Income Tax?

Federal income tax is the portion of your income that goes to the Canadian government. It's calculated using progressive tax brackets where different portions of your income are taxed at different rates.

2. How Federal Tax is Calculated

The calculator uses the following formula:

Where:

• Income in Bracket — The portion of your income that falls within each tax bracket
• Bracket Rate — The tax rate for that specific bracket

Explanation: Your income is divided into portions that correspond to each tax bracket, and each portion is taxed at its respective rate.

3. 2023 Federal Tax Brackets

2023 Federal Tax Brackets for Ontario:

• 15% on the first $53,359 of taxable income
• 20.5% on the next $53,358 (up to $106,717)
• 26% on the next $58,713 (up to $165,430)
• 29% on the next $70,245 (up to $235,675)
• 33% on any amount over $235,675

4. Using the Calculator

Instructions: Enter your taxable income in Canadian dollars (CAD). The calculator will determine how much of your income falls into each bracket and calculate the total federal tax owed.

5. Frequently Asked Questions (FAQ)

Q1: What counts as taxable income?
A: Taxable income includes employment income, business income, investment income, and most other sources of income after deductions.

Q2: Are tax brackets adjusted annually?
A: Yes, tax brackets are typically adjusted for inflation each year.

Q3: Does this include provincial tax?
A: No, this calculator only computes the federal portion. Ontario provincial tax would be additional.

Q4: What about tax credits and deductions?
A: This calculator shows gross tax before credits. Actual tax payable may be lower after applying credits.

Q5: How often should I check my tax obligations?
A: You should review your tax situation whenever your income changes significantly or at least annually.