From BC to Quebec: How Canada Province Tax Rates Stack Up

Navigating taxes as a US expat in Canada can feel overwhelming, especially when you realize that Canada province tax rates aren’t the same across the country. Whether you’re planning a move, already living in Canada, or simply curious about how regional tax differences might affect your finances, understanding the basics is essential. Let’s break down how Canada’s tax system works, how rates vary by province, and what special considerations expats should keep in mind.

Understanding Canada’s federal and provincial tax system structure

Canada’s tax system is unique in that it combines both federal and provincial (or territorial) taxes. This means that, unlike in the U.S. where states may or may not levy income tax, every Canadian province and territory imposes its own income tax in addition to the federal tax. For U.S. expats, this dual structure is important to grasp, as it directly impacts your total tax liability and how you plan your finances.

• Federal tax: The federal government sets base income tax rates that apply to all residents and non-residents earning Canadian-source income. These rates are progressive, meaning the more you earn, the higher your tax rate.
  
• Provincial/territorial tax: Each province and territory sets its own tax brackets and rates, which are also generally progressive. These rates are applied to your taxable income after federal taxes are calculated. The result? Your total tax bill can vary significantly depending on where you live or earn income in Canada.

Key takeaways:

• You’ll always pay federal tax, but your provincial or territorial tax rate depends on your region.
• The combined effect of federal and provincial taxes means that Canada province tax rates are a crucial factor in your overall tax planning as an expat.

How provincial tax rates vary across Canadian regions

One of the most important things to know as a U.S. expat is that Canada province tax rates can differ dramatically from one region to another. This isn’t just a minor detail—it can have a real impact on your take-home pay and long-term financial planning.

Why do rates vary?

Each province and territory has the authority to set its own tax brackets and rates. This allows them to address local needs and priorities, but it also means that two people with identical incomes could pay very different amounts of tax depending on where they live.

Examples of provincial differences:

• Quebec: Known for having the highest provincial income tax rates in Canada. For example, the top marginal rate in Quebec can exceed 25% (provincial portion alone).
• Alberta: Traditionally offers some of the lowest provincial tax rates, with a flat rate for many years (though now it’s slightly progressive).
• Ontario and British Columbia: Fall somewhere in the middle, with moderate rates and several tax brackets.
• Atlantic provinces (e.g., Nova Scotia, Newfoundland and Labrador): Often have higher rates, especially at lower income levels.

For expats

• Where you choose to live or work in Canada can significantly affect your after-tax income.
• If you’re considering a move within Canada, it’s wise to compare provincial tax rates before making a decision.

Combined federal and provincial tax rate comparisons by province

To truly understand your potential tax liability, you need to look at the combined federal and provincial tax rates. This is the total percentage of your income that could go to taxes, and it’s where regional differences become most apparent.

2025 combined top marginal tax rates by province:

Province/Territory	Top Marginal Rate
Nova Scotia	54.00%
Ontario	53.53%
British Columbia	53.50%
Quebec	53.30%
New Brunswick	52.50%
Prince Edward Island	52.00%
Newfoundland and Labrador	51.30%
Manitoba	50.40%
Saskatchewan	47.50%
Alberta	48.00%
Yukon	48.00%
Northwest Territories	47.05%
Nunavut	44.50%

What does this mean for you?

• The difference between the lowest and highest combined rates can be over 10%. For high earners, this is a substantial amount.
• Even at lower income levels, the variation in Canada province tax rates can impact your budget and savings.

Remember, as a U.S. expat, you may also need to consider U.S. tax obligations and how foreign tax credits or exclusions apply.

Special Tax Considerations for Non-Residents: The 48% Federal Surtax

If you’re a U.S. expat considered a non-resident for Canadian tax purposes, there’s an important detail you shouldn’t miss: the 48% federal surtax. It’s a rule that often surprises expats.

What is the 48% federal surtax?

Non-residents who earn certain types of Canadian-source income—like employment income, business income, or capital gains from Canadian real estate—don’t pay provincial or territorial income tax. Instead, the Canada Revenue Agency (CRA) applies a 48% surtax on the basic federal tax payable to approximate the combined federal and provincial rates a resident would pay.

In other words, it’s not 48% on your income—it’s 48% of your federal tax bill.

How does this affect expats?

If you’re not a resident of any province or territory on December 31, and you earn taxable Canadian income, this surtax may apply. It’s especially relevant for U.S. expats who have left Canada mid-year or split time between countries.

Ready to simplify your expat taxes?

Navigating Canada province tax rates and cross-border tax rules doesn’t have to be stressful. At Bright!Tax, we specialize in helping U.S. expats like you understand your obligations, minimize your tax bill, and stay compliant—no matter where in Canada you call home. Let us take the guesswork out of your expat tax journey so you can focus on what matters most.

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