If you think Canada’s income tax is high, think again.
Last week, the Canada Revenue Agency (CRA) revealed the federal tax brackets for 2025, adjusted for inflation.
While federal tax rates remain the same, the income thresholds for each bracket have shifted. According to the agency, the indexation increase will be 2.7 per cent in 2025, lower than the 4.7 per cent increase in 2024.
This is how much income tax you’ll have to pay next year based on your bracket:
- Less than or up to $57,375 — 15 per cent
- Between $57,375 and $114,750 — 20.5 per cent
- Between $114,750 and $177,882 — 26 per cent
- Between $177,882 and $253,414 — 29 per cent
- $253,414 and over — 33 per cent
If you think these percentages are high, it might be eye-opening to learn how much higher the income tax rate is in other countries.
Governments use taxes to help run the country and pay for programs and social services. These include education and schools, health care and hospitals, ambulances and fire services, wildlife conservation, building roads and bridges, and maintaining parks and playgrounds, to name a few.
Keep in mind that comparing income tax rates between countries can be tricky. Tax laws differ, and the tax burden might fall differently on different groups. Other countries may also have different credits, benefits and deductions that lessen the tax people have to pay.
Here are five countries that have higher income tax rates compared to Canada.
United Kingdom
The U.K.’s income tax brackets (or “bands,” as they call them) based on the tax year of April 2024 to April 2025 are:
- Personal allowance (the amount of income a person can get before they pay tax): Up to £12,570 — 0 per cent
- Basic rate: £12,571 to £50,270 — 20 per cent
- Higher rate: £50,271 to £125,140 — 40 per cent
- Additional rate: Over £125,140 — 45 per cent
The rate jump between each bracket is much bigger in the U.K. than in Canada. It’s important to note that tax brackets and personal allowances also depend on where you are in the U.K.
For example, Scotland’s tax brackets are different from Wales’.
Japan
Japan’s income tax brackets for 2024 are:
- Less than 1.95 million yen — 5 per cent
- 1.95 to 3.3 million yen — 10 per cent
- 3.3 to 6.95 million yen — 20 per cent
- 6.95 to 9 million yen — 23 per cent
- 9 to 18 million yen — 33 per cent
- 18 to 40 million yen — 40 per cent
- More than 40 million — 45 per cent
Canada’s threshold between different tax brackets is much larger. For example, 9 million yen is around $83,600 CAD, which still falls within the 20.5 per cent rate in Canada.
Japan is known for having one of the highest income tax rates in the world, but it aims to make higher-income citizens pay more taxes.
Finland
Finland’s income tax brackets for 2025 are:
- Up to €21,200 — 12.64 per cent
- €21,299 to €31,500 — 19 per cent
- €31,500 to €52,100 — 30.25 per cent
- €52,100 to €88,200 — 34 per cent
- €88,200 to €150,000 — 41.75 per cent
- Over €150,000 — 44.25 per cent
At €52,100, which is around $77,000 CAD, Finnish people are already taxed 30 per cent. In Canada, that bracket is still at 20.5 per cent.
Like Japan, Finland is known for having one of the highest income tax rates in the world. That might explain why it’s ranked as the happiest country in the world for the seventh time.
Its higher taxes guarantee its citizens a high standard of living, with everyone benefiting from what the taxes pay for, regardless of their financial situation.
China
China’s income tax brackets for 2024 are:
- ¥0 to ¥36,000 — 3 per cent
- ¥36,000 to ¥144,000 yuan — 10 per cent
- ¥300,000 to ¥420,000 — 25 per cent
- ¥420,000 to ¥660,000 — 30 per cent
- ¥660,000 to ¥960,000 — 35 per cent
- Over ¥960,000 — 45 per cent
The highest bracket ¥960,000, is just $186,000 CAD, which is already being taxed at 45 per cent.
Sweden
Most Swedish citizens pay only local tax on their annual income. The rate varies depending on local authority but can range from 29 to 35 per cent. The country’s average local tax rate is 33 per cent, which is the rate for Canada’s highest bracket.
People above a certain income threshold, or the strata limit, pay an additional 20 per cent state income tax. For 2024, the strata limit is SEK 598,500, which is $76,889.35 CAD.
Its high tax rates go towards providing its citizens with public services like universal healthcare and free higher education.
United States
And if you were curious about the U.S., according to the Internal Revenue Service, its 2025 income tax brackets adjusted for inflation are:
- 37 per cent for incomes over $626,350 ($751,600 for married couples filing jointly)
- 35 per cent for incomes over $250,525 ($501,050 for married couples filing jointly)
- 32 per cent for incomes over $197,300 ($394,600 for married couples filing jointly)
- 24 per cent for incomes over $103,350 ($206,700 for married couples filing jointly)
- 22 per cent for incomes over $48,475 ($96,950 for married couples filing jointly)
- 12 per cent for incomes over $11,925 ($23,850 for married couples filing jointly)
- 10 per cent for incomes $11,925 or less ($23,850 or less for married couples filing jointly)
As you can see, the threshold for each bracket is slightly higher than in Canada, but it does take into account the combined income of couples.
Overall, Canadians pay more in taxes but, in turn, have access to more universal services like healthcare.
