Middle-income earners in Nova Scotia face higher tax rates than other Canadians

Nova Scotians face some of the highest income tax rates in Canada—and not just “the rich.”

As shown in a new study published by the Fraser Institute, Nova Scotians at the national average income level face substantially higher tax rates on the next dollar they earn than people with identical incomes in Ontario and Western Canada.

Let’s look at the numbers.

At the national average market income level (in 2022) of $52,750, Nova Scotians face a provincial tax rate of 14.95 per cent on the next dollar they earn compared to 7.7 per cent in British Columbia, 9.15 per cent in Ontario and Alberta 10 per cent. This means that the tax bite for middle-income workers from earning additional money is far higher in Nova Scotia than in most of the country.

To further illustrate the impact of these different tax rates, consider how much additional income a person must earn (after accounting for both federal and provincial taxes) to increase their take-home pay by $100. In Nova Scotia an individual at the national average income must earn an additional $154.90 to boost their after-tax income by $100 compared to only $139.30 in B.C.

In fact, the middle-income tax rate in Nova Scotia is so high by national standards that it’s almost identical to rates faced by the highest-income earners in some other provinces. In Saskatchewan and Alberta, for example, CEOs earning $500,000 face a tax rate of 14.5 per cent and 15 per cent respectively. Again, this is nearly identical to the tax rate faced by the national average income earner in Nova Scotia.

Alongside other factors, these tax rate differences at various income levels ensure that Nova Scotians earning the national average income face a much higher overall provincial income tax burden than someone with a similar income elsewhere. Indeed, the provincial tax bill in Nova Scotia for someone earning the national average income is more than twice as large as for someone earning the exact same income in Ontario or B.C.

Across Canada, governments take large bites out of the paycheques of average-income earners by way of personal income taxes, and high-income tax rates mean that governments take a substantial bite out of each additional dollar earned. By reducing tax rates on middle-income residents, Nova Scotia’s government can reduce the tax bite on Nova Scotians who work hard to earn extra money.