Our Canadian tax system has 4 steps; each time you jump to a new level, the taxes on each additional dollar earned increase. This tax rate on your last dollar earned is called your 'marginal tax rate' but your 'effective tax rate' is the average of them all. (For you trivia folks, the average tax rate paid by Canadians is 25%.) If you can reduce your taxable income to keep from moving up into that next bracket, then you can save on your overall tax bill.
How can you lower your taxable income?
- RRSP Contributions
When couples hover between tax brackets: How to stay in the lower one
