2020 Nova Scotia Marginal Tax Rates

How much you pay in income taxes in Nova Scotia 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 54% in income tax in Nova Scotia.  This means you would need to have a gross income of $2.17 to take home an additional dollar.


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 the first $29,590 earned you will keep 76 cents for every dollar earned.  $1 - ($1 x 23.79%) = $0.7621.
    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 $50,000 salary would get to keep 65 cents for every dollar earned and would need to earn $1.55 to take home a dollar.  $1/0.6455 = $1.55, this is also the amount you effectively earn by saving a dollar at this marginal tax rate.
    Below we have a two charts with the marginal tax rates, the amount of after tax earnings for every dollar earned and the amount you need to earn to take home a dollar, the tax rate on eligible Canadian dividends and the tax rate on capital gains.



2020 Provincial Marginal Tax Rates in Nova Scotia

Taxable Income

Tax Rate

$1 After Tax Earnings

Amount Needed to Net a $1

Dividend Tax Rate

Capital Gains Tax Rate

first $29,590

8.79%

$0.912

$1.096

-0.08%

4.4%

over $29,590 up to $59,180

14.95%

$0.851

$1.175

8.42%

7.48%

over $59,180 up to $93,000

16.67%

$0.833

$1.20

10.79%

8.34%

over $93,000 up to $150,000

17.5%

$0.825

$1.212

11.94%

8.75%

over $150,000

21%

$0.79

$1.266

16.77%

10.5%


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Basic Personal Amount: Your first $8,481 in earnings are exempt from provincial income taxes in Nova Scotia for 2020.  An important note that is on the Nova Scotia Personal Tax Credit Return states that; if your taxable income from all sources for the year will be $25,000 or less enter $11,481, comprising the basic amount of $8,481 and the additional amount of $3,000, and if it is more than $75,000 enter $8,481.  If your taxable income will be between $25,000 and $75,000 and you want to calculate a partial claim for the $3,000 additional amount.
    If you earned more than $25,000, but less than $75,000 in taxable income, you can claim the additional amount that is equal to $3000 - (6% of your taxable income above $25,000).
    This works out to be an additional tax of 0.53% above our posted rates on earning between $25,000 and $75,000.   6% at 8.79% tax bracket = 0.5274%.
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 Nova Scotia

Taxable Income

Tax Rate

$1 After Tax Earnings

Amount Needed to Net a $1

Dividend Tax Rate

Capital Gains Tax Rate

first $29,590

23.79%

$0.76

$1.312

-0.11%

11.9%

over $29,590 up to $48,535

29.95%

$0.70

$1.428

8.39%

14.98%

over $48,535 up to $59,180

35.45%

$0.65

$1.549

15.98%

17.73%

over $59,180 up to $93,000

37.17%

$0.63

$1.592

18.35%

18.59%

over $93,000 up to $97,069

38%

$0.62

$1.613

19.5%

19%

over $97,069 up to $150,473

43.5%

$0.565

$1.77

27.09%

21.75%

over $150,473 up to $150,000

46.5%

$0.535

$1.87

31.23%

23.25%

over $150,000 up to $214,368

50%

$0.5

$2.00

36.06%

25%

over $214,368

54%

$0.46

$2.174

41.58%

27%


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 Nova Scotia

Eligible Canadian dividends that you have received will be grossed up by 38%.  You will also be given a 8.85% provincial dividend credit as well as a 15.0198% federal dividend tax credit on your grossed up dividends.
    Someone that earns less than $29,590 annually and has been paid $100 in dividends in a non-registered account will have no additional tax paid on their dividends that they have received.  The rate is nil, because corporate taxes has already been paid on the company's earnings.
    When combined with the federal dividend tax credit, the total tax rate of -0.11% on their dividends will be applied.  The combined federal and provincial tax rate on dividends received would be (($1 x 1.38 x 23.79%) - ($1.38 x 23.8698%))/$1 = -0.11% at this bracket.

How the math works;

  • first off your $100 in dividends will increase your taxable income by ($100 x 1.38) = $138
  • You will get a dividend tax credit of ($138 x 8.85%) = $12.213
  • You will be taxed on your $138 at 23.79% and will have your taxes reduced by $12.213
  • This works out to ($138 x 8.79% - $12.213) = -$0.083 in net taxes on your dividends
  • The effective tax rate would be -0.08% if it was refundable

For the other tax brackets, we will assume that you are getting paid $100 in dividends to keep the calculations simple.

  • At the second bracket the tax on dividends paid would be ($138 x 14.95% - $12.213)/$100 = 8.42%
  • At the third bracket the tax on dividends paid would be ($138 x 16.67% - $12.213)/$100 = 10.79%
  • At the fourth bracket the tax on dividends paid would be ($138 x 17.5% - $12.213)/$100 = 11.94%
  • At the top bracket the tax on dividends paid would be ($138 x 21% - $12.213)/$100 = 16.77%

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