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.

Federal rates side by side

Canada 2026 (federal only):

Taxable income (CAD)	Rate
$0 - $57,375	15%
$57,375 - $114,750	20.5%
$114,750 - $158,468	26%
$158,468 - $220,000	29%
Over $220,000	33%

The basic personal amount ($16,129 for 2026, estimated) reduces the effective rate at the bottom. The first $16,129 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 - $11,925	10%
$11,925 - $48,475	12%
$48,475 - $103,350	22%
$103,350 - $197,300	24%
$197,300 - $250,525	32%
$250,525 - $626,350	35%
Over $626,350	37%

The standard deduction ($15,700 for 2026, estimated for a single filer) reduces taxable income, so the first $15,700 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 26%, and the US federal rate is 22%. At $200,000, it is 29% vs 24%. At $300,000, it is 33% vs 35%. The gap is widest in the $100,000 to $200,000 range, where Canada’s 26%-29% brackets sit against the US’s 22%-24%.

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)	48.7% (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)

The range in Canada is 48% (Alberta) to 54% (Nova Scotia). 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.

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 $176,100 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.

Capital gains

Canada includes 50% of capital gains in income (for the first $250,000 of net gains annually, increasing to 66.7% above that from June 25, 2024). 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 more favorable. The Canadian treatment is more favorable for the first $250,000 of gains at lower marginal rates, but the US preferential rate wins at most income levels.

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 $73,200 for 2026, approximate) plus CPP2 (4% on earnings between $73,200 and $81,200, approximate) plus EI (1.64% employee, 2.30% employer, on earnings up to $65,700, approximate).

US: Social Security (6.2% employee, 6.2% employer, on earnings up to $176,100 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 the comparison misses

The headline rate comparison misses several factors that affect the actual financial outcome:

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 $2,000 per qualifying child (partially refundable). 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

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