2020 New Brunswick Marginal Tax Rates

How much you pay in income tax in the province of New Brunswick 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.


Credit Card Nerd Math

Below we have two charts with the marginal tax rates, the amount of after tax earnings for every dollar earned ($1 - $1 x Tax Rate), the amount needed to take home a dollar ($1 ÷ After Tax Earnings), the tax rate on Canadian eligible dividends and the capital gains tax rate.



2020 Provincial Marginal Tax Rates in New Brunswick

Taxable Income

Tax Rate

$1 After Tax Earnings

Amount Needed to Net a $1

Dividend Tax Rate

Capital Gains Tax Rate

first $43,401

9.68%

$0.903

$1.107

-5.95%

4.84%

over $43,401 up to $86,803

14.82%

$0.852

$1.174

1.13%

7.41%

over $86,803 up to $141,122

16.52%

$0.835

$1.198

3.48%

8.26%

over $141,122 up to $160,776

17.84%

$0.822

$1.217

5.3%

8.92%

over $160,776

20.3%

$0.797

$1.255

8.69%

10.15%


Advertisement

Basic Personal Amount: Your first $10,459 in earnings are exempt from provincial income taxes in New Brunswick 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 New Brunswick

Taxable Income

Tax Rate

$1 After Tax Earnings

Amount Needed to Net a $1

Dividend Tax Rate

Capital Gains Tax Rate

first $43,401

24.68%

$0.753

$1.328

-5.99%

12.34%

over $43,401 up to $48,535

29.82%

$0.702

$1.425

1.1%

15.41%

over $48,535 up to $86,803

35.32%

$0.647

$1.546

8.69%

17.66%

over $86,803 up to $97,069

37.02%

$0.63

$1.588

11.04%

18.51%

over $97,069 up to $141,122

42.52%

$0.575

$1.74

18.63%

21.26%

over $141,122 up to $150,473

43.84%

$0.562

$1.781

20.45%

21.92%

over $150,473 up to $160,776

46.84%

$0.532

$1.881

24.59%

23.42%

over $160,776 up to $214,368

49.3%

$0.507

$1.972

27.99%

24.65%

over $214,368

53.3%

$0.467

$2.141

33.51%

26.65%


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%.


Advertisement

Tax on Eligible Dividends in New Brunswick

Eligible Canadian dividends that you have received will be grossed up by 38%.  You will also be given a 14% provincial dividend credit as well as a 15.0198% federal dividend tax credit on your grossed up dividends.
    Someone that has taxable income that is less than $43,401 will have their dividends taxed at -5.95% at the provincial level and a -5.99% when combined with the federal dividend credit.
    Someone that been paid $1 in dividends in a non-registered account will have a net dividend tax of -$0.03 (($1 x 1.38 x 9.69%) - ($1 x $1.38 x 14%)) = $0.0319, which is a -5.95% tax rate.
    The combined federal and provincial tax on dividends received would be (($1 x 1.38 x 24.68%) - ($1.38 x 29.0198%)) = -$0.0599 at this bracket or a -5.99% tax rate.

How the math works;

  • first off your $1 in dividends will increase your taxable income by ($1 x 1.38) = $1.38
  • You will get a dividend tax credit of ($1.38 x 14%) = $0.1932
  • You will be taxed on your $1.38 at 9.68% and will have your taxes reduced by $0.1932
  • This works out to ($1.38 x 9.68% - $0.1932) = -$0.0595 in net taxes on your dividends
  • The effective tax rate would be -5.95%

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

  • At the second bracket the tax on dividends paid would be ($1.38 x 14.82% - $0.1932) ÷ $1 = 1.13%
  • At the third bracket the tax on dividends paid would be ($1.38 x 16.52% - $0.1932) ÷ $1 = 3.48%
  • At the fourth bracket the tax on dividends paid would be ($1.38 x 17.84% - $0.1932) ÷ $1 = 5.3%
  • At the top bracket the tax on dividends paid would be ($1.38 x 20.3% - $0.1932) ÷ $1 = 8.69%

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