Marginal tax rate
Last updated
Your marginal tax rate is the tax on one more dollar of taxable income. It is the rate of the bracket that dollar falls in, plus provincial tax on that dollar, plus extras such as the Ontario surtax when they apply. It is higher than your average rate, which is total tax divided by income.
The paycheque calculator shows two ideas. The bracket rates are the statutory federal and provincial rates on the last dollar of taxable income. The estimated marginal rate on the next $100 also picks up the health premium phase-in, surtax, and changes in CPP and EI. Read the label before you quote the number.
Methodology
The estimated rate is a finite difference: tax at your income, tax at that income plus $100, divided by 100. It is an estimate under the calculator’s assumptions, not a line from a return.