Canada and the US both tax income in brackets at the federal level, and both fund public pensions through payroll taxes. Canadian provinces and territories also tax income, while in the US state income tax depends on the state (Washington, for example, has none for 2026). The details differ: the brackets and rates, how the basic exemption works, payroll tax ceilings, and especially capital gains and home sales. This page compares them using the Canada Revenue Agency’s figures for 2026 and the IRS figures for US tax year 2026. It doesn’t cover US state taxes, which differ by state, and it doesn’t put a value on health care, child benefits or other public services. It is part of the income tax hub; the Canada vs US cost of living page compares living costs and health insurance.
Federal income tax brackets
Canada’s federal rates run from 14% to 33% in five brackets; the full table is on tax brackets in Canada. The US has seven rates. For a single filer:
| US rate | Applies to taxable income over (US$) |
|---|---|
| 10% | $0 |
| 12% | $12,400 |
| 22% | $50,400 |
| 24% | $105,700 |
| 32% | $201,775 |
| 35% | $256,225 |
| 37% | $640,600 |
Source: IRS, tax year 2026 inflation adjustments. Married couples filing jointly have wider brackets.
The two systems shelter the first part of income differently. The US subtracts a standard deduction (US$16,100 for a single filer) from income before the brackets apply. Canada gives a basic personal amount as a credit instead: For 2026, the federal basic personal amount is $16,452, a non-refundable credit at the lowest rate (14%); it is reduced gradually for net income above $181,440, down to $14,829 at $258,482 and above. Each province and territory has its own basic personal amount.
Tax at three incomes
The table puts Canadian and US federal income tax and payroll taxes side by side for a single employee with only salary income. Each Canadian salary is converted to US dollars at the Bank of Canada rate of 1.4096 Canadian dollars per US dollar (2026-09-23), and the US amounts are converted back so the rows compare in the same currency.
| C$60,000 | C$100,000 | C$150,000 | |
|---|---|---|---|
| Income in US dollars | US$42,565 | US$70,942 | US$106,413 |
| Canadian federal income tax (C$) | C$5,338 | C$13,302 | C$25,302 |
| US federal income tax (US$) | US$2,928 | US$6,777 | US$14,581 |
| US federal income tax in C$ | C$4,127 | C$9,553 | C$20,553 |
| Canadian provincial income tax, Ontario (C$) | C$2,982 | C$6,723 | C$14,608 |
| CPP and EI (C$) | C$4,340 | C$5,770 | C$5,770 |
| Social Security and Medicare (US$) | US$3,256 | US$5,427 | US$8,141 |
| Social Security and Medicare in C$ | C$4,590 | C$7,650 | C$11,475 |
How it’s worked out: Canadian federal and Ontario tax after the basic personal amounts, the CPP and EI credits and the Canada employment amount (federal tax is the same in every province except Quebec, where the federal abatement reduces it), plus Ontario’s surtax and Health Premium in the provincial row. US federal tax is the salary minus the standard deduction, taxed at the bracket rates above (worked out bracket by bracket), before any credits; Social Security is 6.2% of wages up to US$184,500 and Medicare 1.45% (IRS Topic 751); none of the three salaries reaches the US$200,000 threshold where the Additional Medicare tax starts. The US column has no state income tax; in a state that levies one, it comes on top, as Ontario’s tax does in the Canadian column. For other provinces, lowest tax provinces in Canada has the total at several incomes.
Payroll taxes
Both countries take a share of wages for public pensions and other programs, matched by the employer.
| Canada | US | |
|---|---|---|
| Pension | CPP: 5.95% of earnings between $3,500 and $74,600, plus 4% up to $85,000 (CPP2) | Social Security: 6.2% of wages up to US$184,500 |
| Other | EI premiums, up to an annual maximum | Medicare: 1.45% of all wages, plus an Additional Medicare tax of 0.9% on wages over US$200,000 for a single filer (US$250,000 combined on a joint return) (IRS Topic 560) |
Quebec employees pay into the QPP instead of the CPP, and pay Quebec Parental Insurance Plan (QPIP) premiums plus EI premiums at a reduced rate. For the Canadian rules, see how to check your employer is paying CPP and the CPP contribution rates.
Capital gains
| Canada | US | |
|---|---|---|
| How gains are taxed | 50% of the gain is added to income and taxed at your regular rates | Long-term gains (assets held more than one year) at their own rates; short-term gains as ordinary income |
| Rates | Your marginal rate on the included part | 0% up to US$49,450 of taxable income, 15% up to US$545,500, 20% above (single filer, 2026) |
| Main home | Exempt for the years it is your principal residence (below) | Up to US$250,000 of gain excluded, US$500,000 on a joint return |
Sources: Rev. Proc. 2025-32 and IRS Topic 409 for US capital gains rates, IRS Topic 701 for the home sale exclusion; Canadian capital gains tax has the Canadian calculation.
Selling your home. In Canada: The gain on a home is tax-free for each year you designate it as your principal residence: you or your family must have ordinarily lived in it that year, a family can designate only one home a year, and you report the sale on Schedule 3 and Form T2091; the exempt share is the years designated (while resident in Canada), plus one if you were resident in the year you bought it, divided by the years owned. In the US, the exclusion requires meeting both an ownership test and a use test: owning the home and living in it as a residence for at least 2 years of the 5 years before the sale. It is capped at the amounts above.
Retirement savings accounts
| Account | Annual limit |
|---|---|
| RRSP (Canada) | $33,810, or 18% of last year’s earned income if less |
| TFSA (Canada) | $7,000 |
| 401(k) employee contributions (US) | US$24,500, plus US$8,000 catch-up in most plans for employees aged 50 and over (US$11,250 instead at ages 60 to 63) |
| IRA (US) | US$7,500, plus US$1,100 catch-up at age 50 and over |
US limits are for 2026 (IRS); the RRSP limit also depends on your pension adjustment, as the RRSP contribution limit explains.
Sales tax
Canada charges the GST federally, and most provinces add their own sales tax or a harmonized rate (Alberta and the territories charge only the GST, according to the CRA’s rate table); the rates by province are on lowest tax provinces in Canada. In the US, general sales taxes are state and local taxes, so the rate depends on where you buy.
Related guides
Sources
The figures and rules on this page come from these sources, last checked against them between August 29, 2026 and October 1, 2026. How we check facts.
- Bank of Canada: Data table
- Canada Revenue Agency: Indexation adjustment for personal income tax and benefit amounts
- Canada Revenue Agency: Current year tax rates and income brackets (2026) - Personal income tax
- Canada Revenue Agency: CPP contribution rates, maximums and exemptions
- Canada Revenue Agency: Second additional CPP (CPP2) contribution rates and maximums
- Canada Revenue Agency: Capital Gains – 2025
- Canada Revenue Agency: MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE
- Canada Revenue Agency: How contributions affect your RRSP deduction limit
- Canada Revenue Agency: Basic personal amount - Personal income tax
- Canada Revenue Agency: Principal residence
- Canada Revenue Agency: Income Tax Folio S1-F3-C2, Principal Residence
- Government of Canada: Worksheet for the 2026 Personal Tax Credits Return
- Government of Canada: 2026 Personal Tax Credits Return
- IRS: 26 CFR 601.602: Tax forms and instructions.
- IRS: Topic no. 409, Capital gains and losses | Internal Revenue Service
- IRS: IRS releases tax inflation adjustments for tax year 2026, including amendments from the…
- IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500
- IRS: Topic no. 701, Sale of your home | Internal Revenue Service
- IRS: Topic no. 560, Additional Medicare tax | Internal Revenue Service
- IRS: Topic no. 751, Social Security and Medicare withholding rates | Internal Revenue Service