Many readers may realize this, but I didn’t, until well into my 30s.
Tax brackets, I thought, meant that if I earned over a certain amount, say $75K, all of my earnings would be subject to greater taxes.
That’s not how it works. Here’s where we’re at in Canada, for our federal (not including provincial) taxes per the budget speech today:
Nobody pays taxes on the first $10,320 we earn.
On every dollar after that up to $40,726 , we pay 15% income tax (= $4560.90 in taxes if we earned the full $40726.00).
On every dollar after that up to $81,452, we pay 22% income tax
And on every dollar after that we pay 26% income tax.
As an interesting fyi, income taxes contribute over half the revenue of the Gov’t. The rest comes from corporate taxes and gst.