Canada vs US Tax Rates: A Side-by-Side Comparison

Canadian income tax rates are higher than US rates at most income levels. That much is straightforward. But comparing headline rates without accounting for provincial/state variation, healthcare costs, sales tax, and the credit and deduction differences between the two systems produces a comparison that is correct on the surface and misleading underneath. The person who earns $150,000 in Ontario and moves to Texas does not save exactly the rate difference, because the Texas number does not include the health insurance premium that the Ontario number implicitly covers.

Are Canadian tax rates higher than US tax rates?

Yes, at most income levels. Combined federal-provincial rates in Canada run 3 to 15 percentage points above combined federal-state rates in the US for the same gross income, with the gap widest between $100,000 and $250,000. The gap comes mostly from the provincial layer, and the tables below put numbers to each piece.

• At the federal level alone, the gap is narrower than most people expect: Canada’s 14% lowest bracket (reduced from 15% in mid-2025) is lower than the US’s combined 10%+12% range, and the middle brackets track within a few points of each other until the top.
• The gap widens materially when provincial tax is added, because every Canadian province levies an income tax (ranging from about 10% to 21% at the top) while seven US states have no income tax at all.
• The headline rate comparison also overstates the difference in practice: Canadian rates implicitly include publicly funded healthcare, while US rates do not, so a taxpayer moving from Ontario to Texas adds a health insurance premium that is invisible in the rate table.

Federal rates side by side

Canada 2026 (federal only):

Taxable income (CAD)	Rate
$0 - $58,523	14%
$58,523 - $117,045	20.5%
$117,045 - $181,440	26%
$181,440 - $258,482	29%
Over $258,482	33%

The lowest federal rate was reduced from 15% to 14% effective July 1, 2025; 2026 is the first full year at the new rate. The basic personal amount ($16,452 for 2026) reduces the effective rate at the bottom. The first $16,452 of income is effectively taxed at 0% through the non-refundable credit.

US 2026 (federal only, single filer, post-OBBBA permanent TCJA rates):

Taxable income (USD)	Rate
$0 - $12,400	10%
$12,400 - $50,400	12%
$50,400 - $105,700	22%
$105,700 - $201,775	24%
$201,775 - $256,225	32%
$256,225 - $640,600	35%
Over $640,600	37%

The standard deduction ($16,100 for 2026 for a single filer) reduces taxable income, so the first $16,100 of gross income is effectively taxed at 0%.

At $100,000 of gross income (ignoring the exchange rate for simplicity), the Canadian federal rate on the top dollar is 20.5%, and the US federal rate is 22%. At $200,000, it is 29% vs 24%. At $300,000, it is 33% vs 35%. The federal-only gap is narrow at most income levels; Canada’s 14% lowest bracket is now lower than the US’s 10%+12% combined, and the 20.5% second bracket tracks close to the US’s 22%. The gap widens above $117,045 CAD, where Canada’s 26% bracket runs against the US’s 24%, and above $181,440 CAD, where Canada’s 29% bracket sits five points above the US’s 24%. When provincial and state taxes are layered on (below), the combined Canadian rate exceeds the combined US rate at most levels.

Provincial and state taxes

This is where the comparison varies enormously. Canada has 13 provinces and territories, each with its own income tax brackets. The US has 50 states, 7 of which have no state income tax (Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming) and several others with flat rates.

Combined top marginal rates (selected, approximate):

Jurisdiction	Combined top rate
Nova Scotia	54.0%
Ontario	53.5%
Quebec	53.3%
British Columbia	53.5%
Alberta	48.0%
California	50.3% (37% federal + 13.3% state)
New York (NYC)	49.7% (37% federal + 8.82% state + ~3.9% city)
Texas	37.0% (federal only, no state tax)
Florida	37.0% (federal only)
Washington	37.0% (federal only, but 7% capital gains tax on gains over $270,000)

Among the provinces in this table, the range runs from 48% (Alberta) to 54% (Nova Scotia), and Saskatchewan, not shown, is a touch lower than Alberta at 47.5%. The range in the US is 37% (no-tax states) to over 50% (California, at the highest brackets). Moving from Ontario to Texas produces a large rate drop. Moving from Alberta to California produces a smaller one, or potentially none at the highest incomes.

How much more tax do you pay in Canada than in the US?

It varies by income level, province, and state, but at a typical middle-to-upper income of $150,000, a single filer in Ontario pays roughly $36,500 in combined income tax and mandatory payroll contributions, while the same filer in Texas pays roughly $24,500 in federal income tax plus Social Security and Medicare, a difference of about $12,000.

• Replace Texas with California and the gap shrinks to about $3,000, because California’s top state rate of 13.3% nearly closes it.
• Replace Ontario with Alberta (48% combined at the top, one of the lowest among the provinces) and the gap from Texas widens less than expected, because Alberta’s top combined rate (48%) still exceeds the US federal-only rate (37%) by 11 points.
• The worked comparison below runs through both sides at $150,000 with the underlying math visible, and the caveats (healthcare, sales tax, credits, exchange rate) follow in the later sections.

A worked comparison at $150,000

To make the comparison concrete, here is a rough calculation for a single filer earning $150,000 in employment income, comparing Ontario to Texas. Exchange rate effects are ignored (the comparison uses the nominal amounts in each currency).

Ontario ($150,000 CAD):

• Federal tax (after basic personal credit): approximately $23,000
• Ontario provincial tax: approximately $9,500
• CPP contributions (employee share): approximately $4,000
• EI premiums: approximately $1,050
• Total income tax + payroll: approximately $37,550
• Effective rate: approximately 25%
• Healthcare: covered by OHIP, no separate premium (funded through general revenue)

Texas ($150,000 USD):

• Federal tax (after standard deduction): approximately $24,500
• State tax: $0
• Social Security (employee share, 6.2% on first $184,500 for 2026): approximately $9,300
• Medicare (employee share, 1.45%): approximately $2,175
• Total income tax + payroll: approximately $35,975
• Effective rate: approximately 24%
• Healthcare: employer-sponsored plan, employee premium of $3,000 to $8,000+ per year (average single coverage), plus deductibles and copays

The headline tax numbers are close: approximately 25% in Ontario vs 24% in Texas. But the Ontario number includes universal healthcare. The Texas number requires adding $3,000 to $8,000+ for health insurance and significant out-of-pocket medical costs. Depending on health insurance costs and usage, the all-in burden may be comparable or even higher in Texas.

At higher incomes ($300,000+), the gap widens because Ontario’s top rate (53.5%) runs well above the federal-only US rate (37% in Texas). At that level, the healthcare cost difference is proportionally smaller relative to the tax difference.

How are capital gains taxed in Canada vs the US?

Canada includes 50% of capital gains in income, at every level of gain. The 2024 budget proposed raising that to two-thirds above $250,000 a year, but the increase was cancelled in March 2025 and never took effect. The included portion is taxed at the taxpayer’s marginal rate.

The US taxes long-term capital gains (assets held over one year) at preferential rates: 0%, 15%, or 20% depending on income. Short-term gains (held one year or less) are taxed at ordinary rates.

For a $100,000 long-term capital gain:

• Ontario: $50,000 included in income (50% inclusion), taxed at the marginal rate. At a combined rate of approximately 43% on the included portion, tax is approximately $21,500.
• Texas: $100,000 taxed at the 15% long-term rate (for most filers in this range), plus potentially 3.8% NIIT. Tax is approximately $15,000 to $18,800.

The US treatment of long-term capital gains is generally more favorable. Canada’s 50% inclusion can beat it at low marginal rates, but the US preferential rate wins at most income levels. For the full breakdown (rates, exemptions, and what happens when both countries tax the same gain), see capital gains tax: Canada vs the US compared.

Sales tax and consumption taxes

Canada has the GST (5% federal) plus provincial sales tax (PST) or the harmonized HST (13% in Ontario, 15% in Nova Scotia, New Brunswick, Newfoundland, PEI). Quebec has QST (9.975% on top of GST). Alberta has no provincial sales tax (GST only, 5%).

US state sales taxes range from 0% (Delaware, Montana, New Hampshire, Oregon) to over 10% when local taxes are included (Tennessee, Louisiana, some Texas municipalities).

The Canadian sales tax rate is generally higher than the US rate, and it applies to more goods and services. The GST/HST credit partially offsets this for lower-income Canadians.

Payroll taxes

Canada: CPP contributions (5.95% employee, 5.95% employer, on earnings between $3,500 and $74,600 for 2026, approximate) plus CPP2 (4% on earnings between $74,600 and $85,000, approximate) plus EI (1.63% employee, 2.28% employer, on earnings up to $68,900, approximate).

US: Social Security (6.2% employee, 6.2% employer, on earnings up to $184,500 for 2026, approximate) plus Medicare (1.45% employee, 1.45% employer, no cap, plus 0.9% Additional Medicare Tax on earnings above $200,000).

The US Social Security wage base is much higher than the CPP ceiling, so higher earners pay more payroll tax on the US side. But the CPP2 extension and the EI cap create a smaller layered effect in Canada.

What does the rate comparison miss?

The headline rate comparison misses several factors that affect the actual financial outcome: healthcare, child benefits, education costs, and retirement structures.

• Healthcare. Canadian rates fund universal healthcare. US rates do not. An American earning $150,000 may pay $5,000 to $15,000+ per year in health insurance premiums (employee share plus family coverage) plus deductibles, copays, and out-of-network costs. This is not a tax, but it is a mandatory expense that Canadians do not bear separately.

• Child benefits. Canada’s CCB (Canada Child Benefit) provides tax-free monthly payments of up to $7,787 per child under 6 and $6,570 per child 6 to 17 (2024-2025, income-tested). The US child tax credit is $2,200 per qualifying child (partially refundable, raised from $2,000 by the One Big Beautiful Bill Act). For families with children, the Canadian benefit is more generous at most income levels.

• Education. Canadian tuition is generally lower than US tuition, and Canadian student loans have more favorable terms. This is not a tax comparison, but it affects the total cost of living in each country.

• Retirement. CPP provides a defined benefit pension. Social Security provides a defined benefit pension. The structures differ, but both exist, and which one to claim first depends on your situation. Supplementary savings vehicles (RRSP vs 401(k)/IRA) have similar tax treatment.

What should I do next?

If you are comparing the two countries for a potential move, start with your specific province and state, your specific income level, and your family structure. Include healthcare costs, child benefits, and payroll taxes in the comparison, not just income tax rates. The headline rate difference is real, but the all-in difference is smaller (and sometimes reversed) when you include everything.

• Moving from Ontario to Florida: taxes, a specific corridor comparison

• Moving from BC to California: taxes, a high-tax-to-high-tax comparison

• Moving from Toronto to New York: taxes, the highest-tax US destination

• Leaving Canada permanently: a tax checklist, the full move checklist

• Moving from Canada to Colorado: taxes, a low flat-rate state corridor

• Moving from Canada to Maryland, a graduated-rate state near DC with county surcharges

• Moving from Canada to Minnesota, one of the highest-tax US states (up to 9.85%)

• Cross-border tax by city: Toronto (Ontario surtax, probate fees, double land transfer tax), Vancouver (foreign buyer tax, speculation tax, tech corridor), Calgary (lower top rate, no PST, oil and gas), Montreal (Revenu Quebec, QPP, QST), Florida (snowbird pipeline, homestead, domicile)

• Income splitting: Canada vs US, pension splitting, spousal RRSP, and the strategies that reduce the rate gap

• Standard deduction vs itemizing for cross-border filers, the deductions that change the effective rate comparison

• Currency conversion and exchange rates, the rate rules that make the two countries’ numbers comparable

• Cross-border charitable giving, when donating across the border changes the deduction math

This guide is general information, not tax advice for your specific situation. Which points apply, and how, depends on your facts.