2020 Manitoba Marginal Tax Rates

How much you pay in income taxes in Manitoba will depend on how much you make and how you make your money.  The most taxed earnings will be derived from labour, followed by capital gains or dividends depending on your marginal tax bracket.
    Depending on how you earn your money you can pay as much as 50.4% in income taxes and would need to earn up to $2.02 just to net you a dollar after the income taxes have been paid.


Credit Card Nerd Math

For the after tax earning all we do is take a dollar and subtract the taxes paid at the marginal tax rates.  For example, for someone with a $80,000 salary, they would get to keep 62.1 cents for every dollar earned.  $1 - ($1 x 37.9%) = $0.621.
    For the amount needed to save a dollar we took a dollar and divided it by the after tax earnings rate.  For example, someone with a $80,000 salary would get to keep 62.1 cents for every dollar earned and would need to earn $1.61 to take home a dollar.  $1/0.621 = $1.61, this is also the amount you basically earn by saving a dollar at this marginal tax rate.
    Below we have two charts with the marginal tax rates, the amount of after tax earnings for every dollar earned, the amount you need to earn to take home a dollar, the tax rate on dividends received and the tax rate on the capital gains tax that you have.  The first chart is the Manitoba income tax by itself and the second chart combines the federal and provincial income taxes in Manitoba.



2020 Provincial Marginal Tax Rates in Manitoba

Taxable Income

Tax Rate

$1 After Tax Earnings

Amount Needed to Net a $1

Dividend Tax Rate

Capital Gains Tax Rate

first $33,389

10.8%

$0.892

$1.121

3.86%

5.4%

over $33,389 up to $72,164

12.75%

$0.8725

$1.146

6.56%

6.375%

over $72,164

17.4%

$0.826

$1.211

12.97%

8.7%


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Basic Personal Amount: Your first $9,838 in earnings are exempt from provincial income taxes in Manitoba for 2020.
Capital Gains: Taxable income derived from capital gains will be reduced by half, making an effective marginal tax rate on capital gains that is 50% of your current marginal tax rate.  For example, if you have $10,000 in capital gains, you would have $5,000 in taxable income from your capital gains.



2020 Combined Federal and Provincial Marginal Tax Rates in Manitoba

Taxable Income

Tax Rate

$1 After Tax Earnings

Amount Needed to Net a $1

Dividend Tax Rate

Capital Gains Tax Rate

first $33,389

25.8%

$0.742

$1.348

3.84%

12.9%

over $33,389 up to $48,535

27.75%

$0.723

$1.383

6.53%

13.88%

over $48,535 up to $72,164

33.25%

$0.6675

$1.498

14.12%

16.63%

over $72,164 up to $97,069

37.9%

$0.621

$1.61

20.53%

18.95%

over $97,069 up to $150,473

43.4%

$0.566

$1.767

28.12%

21.7%

over $150,473 up to $214,368

46.4%

$0.536

$1.866

32.26%

23.2%

over $214,368

50.4%

$0.496

$2.016

37.78%

25.2%


Federal Personal Amount: : For most Canadians, the first $13,229 in earnings are exempt from Federal taxes in 2020, but if you earn $150,473 or more, the basic amount is reduced.  It is reduced when you earn between $150,473 and $214,368.  If you earn more than $214,368 in taxable income, your basic personal amount would be $12,298. The maximum reduction of your basic personal amount will cost you an extra $139.65. The basic personal amount changes the second highest federal tax bracket from 29% to 29.22%.


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Tax on Eligible Dividends in Manitoba

Eligible Canadian dividends that you have received will be grossed up by 38%.  You will also be given a 15.0198% dividend tax credit on your grossed up dividends at the federal level and a 8% dividend tax credit at the provincial level.  The federal rates on dividend income can be found here.
    Someone that has a $9,838 annual salary and has been paid $1,000 in dividends in a non-registered account will have an effective provincial tax rate in Manitoba of 3.86% on their dividends that they have received.  The rate is lower, because corporate taxes has already been paid on the company's earnings.  The combined federal and provincial tax rate on dividends received would be (($1 x 1.38 x 25.8%) - ($1.38 x 23.0198%))/$1 = 3.84% at this bracket.

How the math works;

  • first off your $1,000 in dividends will increase your taxable income by ($1,000 x 1.38) = $1,380
  • You will get a dividend tax credit of ($1,380 x 8%) = $110.40
  • You will be taxed on your $1,380 at 10.8% and will have your taxes reduced by $110.40
  • This works out to ($1,380 x 10.8% - $110.40) = $38.64 in net taxes on your dividends
  • The effective tax rate would be ($38.64/$1000) = 3.86%

For the other tax brackets, we will assume that you are getting paid $1,000 in dividends to keep the calculations simple.

  • At the second bracket the tax on dividends paid would be ($1,380 x 12.75% - $110.40)/$1,000 = 6.56%
  • At the top bracket the tax on dividends paid would be ($1,380 x 17.4% - $110.40)/$1,000 = 12.97%

Provincial Tax Rates: Provincial Tax Rates 2020
Federal Tax Rates: https://www.canada.ca/en/revenue-agency/services/forms-publications/payroll/t4032-payroll-deductions-tables/t4032ab/t4032ab-january-general-information.html#_Toc337712797
Federal Dividend Tax Credit: http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/rtrn/cmpltng/ddctns/lns409-485/425-eng.html