TL;DR
How Canada and US income tax compare
- On 100,000 of employment income in each country’s own currency, a full-year employee outside Quebec pays about CAD 13,302 of federal income tax in Canada and USD 13,170 in the US in 2026, a tenth of a percentage point apart.
- The provincial and state layer is where the two countries diverge: each province adds its own tax table, and US state income tax ranges from none to a state’s own bracket table.
- If you file in both countries, your bill is the combined result of two returns after foreign tax credits, and neither federal table shows it.
The tax rate in Canada vs US is close at the federal level. Provincial and state tax, and which income each country taxes at all, account for the difference.
Canada taxes on residency. The US taxes its citizens and green card holders wherever they live. Anyone with income or a home in both countries files under both rules at once.
All figures are 2026 figures in each country’s own currency, with no conversion between them.
Federal tax brackets in Canada vs the US for 2026
Canada has five federal brackets in 2026. The lowest rate is 14%; for 2025 it was a blended 14.5% because the reduction from 15% took effect on July 1, 2025.
| Taxable income from | Up to | Rate |
|---|---|---|
| $0 | $58,523 | 14% |
| $58,523 | $117,045 | 20.5% |
| $117,045 | $181,440 | 26% |
| $181,440 | $258,482 | 29% |
| $258,482 | and above | 33% |
The US has seven federal brackets. The IRS set the 2026 single-filer thresholds in its inflation adjustments, and the standard deduction is $16,100.
| Taxable income from | Up to | Rate |
|---|---|---|
| $0 | $12,400 | 10% |
| $12,400 | $50,400 | 12% |
| $50,400 | $105,700 | 22% |
| $105,700 | $201,775 | 24% |
| $201,775 | $256,225 | 32% |
| $256,225 | $640,600 | 35% |
| $640,600 | and above | 37% |
Federal tax on 100,000 of employment income in Canada vs the US
We built both columns for a single filer with 100,000 of employment income, employed for the full year outside Quebec, with no deductions or credits other than the standard federal ones. On the Canadian side those are the basic personal amount ($16,452), the Canada employment amount ($1,500), base CPP ($3,519) and EI premiums ($1,123), each credited at 14%.
| Step | Canada (CAD) | US (USD) |
|---|---|---|
| Employment income | 100,000 | 100,000 |
| Deducted before tax | 1,127 (enhanced CPP and CPP2) | 16,100 (standard deduction) |
| Taxable income | 98,873 | 83,900 |
| Federal tax before credits | 16,465 | 13,170 |
| Non-refundable credits | 3,163 | 0 |
| Federal tax | 13,302 | 13,170 |
| Share of gross income | 13.3% | 13.2% |
Canadian figure includes the basic personal amount, Canada employment amount, CPP and EI credits and the enhanced CPP deduction. US figure includes the standard deduction. Income tax only; CPP, EI and FICA contributions are not included.
Talk to a cross border CPA
Tell us where the income comes from and where you live, and we will tell you which returns you owe. Confidential, and handled by a CPA or an Enrolled Agent.
Provincial and state income tax in Canada vs the US
Each Canadian province and territory applies its own bracket table on top of the federal one, and none has a zero rate. In 2026 Ontario’s lowest rate is 5.05% and Alberta’s is 8% on the first $61,200. Quebec collects its own income tax through Revenu Quebec on a separate return.
In the US, state income tax ranges from none, as in Texas and Florida, to a state’s own bracket table. Two people on the same salary can pay different total tax because they live or work in different states.
Whether taxes in Canada vs US are higher depends on which province and which state you compare.
Payroll tax in Canada vs the US: CPP and EI against FICA
Both countries take payroll contributions on top of income tax. The employee rates are close and the earnings ceilings are far apart.
| Contribution | Country | Employee rate | 2026 earnings ceiling |
|---|---|---|---|
| CPP | Canada | 5.95% | CAD 74,600, first 3,500 exempt |
| CPP2 | Canada | 4% | CAD 74,600 to 85,000 |
| EI | Canada | 1.63% | CAD 68,900, no exemption |
| Social Security | US | 6.2% | USD 184,500 |
| Medicare | US | 1.45% | No ceiling |
- EI has no basic exemption, so the 1.63% applies from the first dollar.
- An Additional Medicare Tax of 0.9% applies to wages above USD 200,000 for a single filer. Congress set the threshold in statute and it is not indexed.
On 100,000 of employment income in 2026 the employee pays:
- Canada: CPP 4,230.45 plus CPP2 416.00 plus EI 1,123.07, which is CAD 5,769.52
- US: Social Security 6,200 plus Medicare 1,450, which is USD 7,650
Capital gains tax in Canada vs the US
Canada includes half of a capital gain in income and taxes it at your marginal rate; the inclusion rate is one half, and the other half is not taxed. The US taxes the whole gain, and a gain on an asset held for more than one year is taxed at the long-term rate of 0%, 15% or 20% in 2026, depending on your taxable income.
Tax on a 100,000 capital gain in Canada vs the US
The same single filer sells a rental in 2026 at a 100,000 gain, in each country’s own currency, with no income beyond the 100,000 of employment income from the federal tax example.
| Step | Canada (CAD) | US (USD) |
|---|---|---|
| Gain | 100,000 | 100,000 |
| Amount taxed | 50,000 (one half) | 100,000 (all) |
| Rate | 20.5% (federal marginal) | 15% (long-term) |
| Federal tax on the gain | 10,250 | 15,000 |
| Not included | Provincial tax | State tax |
Capital gains tax Canada vs US depends on your other income in the year: Canada adds the taxable half to income, and the US sets the long-term rate by total taxable income.
Neither country taxes the full gain on your own home, and the exemptions differ:
- CanadaCanada exempts the gain on a principal residence for the years you designate it while resident in Canada. Years when you were not a resident cannot be designated, so the exempt share is smaller for every year you own the home from abroad, and if you were already a non-resident in the year you bought it you also lose the extra year normally included in the calculation.
- United StatesThe US excludes up to USD 250,000 of gain on a main home, or USD 500,000 for a married couple filing jointly, where you owned and lived in it for two of the five years before the sale. The amounts are not indexed and have not changed since 1997.
Corporate tax and sales tax in Canada vs the US
- Corporate tax rate Canada vs US: both countries add provincial or state corporate tax on top of a federal rate, and Canada also has a federal small business rate for qualifying Canadian-controlled private corporations.
- Sales tax: Canada charges a federal GST in every province and territory, combined with provincial tax into an HST in the participating provinces. The US has no federal sales tax; state and local governments set their own.
Property tax in Canada vs the US
There is no federal property tax in Canada or in the US.
Municipalities set property tax in Canada. In the US the county, the city and the school district can each levy their own. A national figure for property tax Canada vs US averages rates set by separate local governments, so the comparison that applies to you is between two specific addresses.
Ask a CPA to run your year in both countries
When income, residency or property is split between the two countries, we can prepare the year both ways before you decide anything.
RRSP vs 401(k) and TFSA vs Roth IRA: 2026 contribution limits
| Account | Country | 2026 contribution limit |
|---|---|---|
| RRSP | Canada | CAD 33,810, or 18% of prior-year earned income if lower |
| 401(k) | US | USD 24,500 employee deferral |
| TFSA | Canada | CAD 7,000 |
| Roth IRA | US | USD 7,500, shared with any traditional IRA |
- RRSP and 401(k): contributions reduce taxable income and withdrawals are taxed as income in the plan’s own country.
- TFSA and Roth IRA: contributions are made from taxed income and growth and withdrawals are tax-free in the plan’s own country.
The US does not give a TFSA the deferral it gives an RRSP or RRIF. The IRS limits Rev. Proc. 2014-55 to arrangements that qualify as pension plans under the Canada US treaty, and a TFSA is not one, so a US person reports the account’s interest, dividends and realized gains on the US return each year. Our guide to TFSA and RRSP reporting on a US return covers the forms.
Filing taxes in both Canada and the US
A single rate comparison applies to someone who lives, earns and files in one country. Anyone with income, residence or property split between the two files two returns.
Situations where a single rate comparison does not apply
- Both Your bill is the combined result of two returns after foreign tax credits.
- Mid year Canada and the US can each set a different residency date, and the CRA treats certain property as sold on departure.
- Property Rent, sale proceeds and withholding are handled under the rules of the country where the property is located, wherever you live.
The treaty and foreign tax credits are the two protections against double taxation between Canada and the US, and neither applies automatically. You claim the credit:
- on the correct return
- for the correct year
- on income the other country’s tax authority treats as sourced where you say it is
If any of the three is wrong, the same dollar can be taxed twice and the fix is an amended return.
Who prepared this
Cross border filing between Canada and the US is one of our practice areas, with support through the year.
Taxpayers approach us after doing their taxes in TurboTax or on H&R Block or a do-it-yourself app, and they have a huge tax bill and they don’t know why they have it. They don’t know even how it came about. They sometimes don’t have the money for it.
George Dimov, CPA
Very satisfied with Dimov for handling both my US and Canadian taxes with utmost efficiency and professionalism, will be using every year from now on.
hao wu, Google review
Ask a cross border CPA about your own year
If a move, a job or a property has put you on both sides, send us the facts and we will tell you which returns you owe and what they cost before any work starts.
General information, and not advice for your circumstances. Rates change each year and your result depends on your own facts, so speak to a CPA before acting on it.
Reviewed by George Dimov, CPA · individual and business income taxes · tax preparation and strategy · 20 years in accounting · President and Managing Owner