The purpose of the graduated tax bracket system is to tax individuals with lower income levels at lower tax rates. Once the individual starts to earn more, the marginal tax rate on the next dollar of income will be higher if the income falls into the next tax bracket.
This system ensures taxpayers are taxed fairly and proportionately relative to their level of income; the more income you make, the more taxes you will be required to pay on the income falling into higher tax brackets.
For 2023, the tax system in Canada uses the following federal tax brackets to calculate personal tax. An individual’s income may fall within multiple brackets, depending on their income level for a calendar year. Income within a bracket will be taxed at the rate noted below that applies to that bracket. For most of you who are students, you will have income from co-op employment, RESP withdrawals, part-time jobs that will result in annual income below $53,359 for 2023. The federal tax rate that will apply will be 15%.