Dividend Tax Calculator
Calculate the tax on Canadian dividends, including the gross-up, federal and provincial dividend tax credits, and your effective dividend tax rate.
Dividend Details
Dividend Tax Summary
Effective Rate on Dividend
7.1%
Marginal Dividend Rate
6.4%
How it works: Canadian dividends are "grossed up" to reflect pre-tax corporate income, then you receive a Dividend Tax Credit (DTC) to offset the tax. Eligible dividends (from public corporations) get a 38% gross-up and a larger DTC, resulting in lower effective tax rates. Non-eligible dividends (from CCPCs) get a 15% gross-up and a smaller DTC. At low income levels, the DTC can cancel most or all of the tax on the dividend, but the credits are non-refundable and only reduce tax at their own level, so some provinces still charge tax (and Ontario adds the Ontario Health Premium).
Dividend Tax in Canada
Canada uses a gross-up and tax credit mechanism for dividends. The dividend is "grossed up" to approximate the corporation's pre-tax income, then a Dividend Tax Credit (DTC) is applied to account for taxes already paid at the corporate level.
Eligible dividends: Paid by public corporations and large CCPCs from income taxed at the general corporate rate. They receive a 38% gross-up and a larger DTC, resulting in a lower effective tax rate for the shareholder.
Non-eligible dividends: Paid from income taxed at the small business rate. They receive a 15% gross-up and a smaller DTC, resulting in a higher effective tax rate.
Low-income advantage: At low income levels, the dividend tax credit can exceed the tax on the grossed-up dividend at that level, leaving little or no tax on dividend income. The credits are non-refundable, so a province whose credit is smaller than its tax (for example Nova Scotia or Newfoundland and Labrador) still charges tax, and Ontario adds the Ontario Health Premium.
Quebec: Quebec residents file a separate provincial return with Revenu Québec and receive a refundable Quebec abatement of 16.5% of basic federal tax. The calculator applies it to the federal tax on the dividend after the federal dividend tax credit.
How much tax will I pay on $20,000 of dividends? Every province (2026)
$20,000 of actual cash dividends received on top of $60,000 of other taxable income. The net figures are what is left of the $20,000 after the personal tax it adds.
| Province or territory | Eligible dividend: net (tax rate) | Non-eligible dividend: net (tax rate) |
|---|---|---|
| British Columbia | $19,674 (1.6%) | $16,042 (19.8%) |
| Yukon | $19,321 (3.4%) | $15,446 (22.8%) |
| Northwest Territories | $19,288 (3.6%) | $16,764 (16.2%) |
| Ontario | $18,572 (7.1%) | $15,794 (21.0%) |
| Nunavut | $18,076 (9.6%) | $16,352 (18.2%) |
| Saskatchewan | $18,073 (9.6%) | $15,066 (24.7%) |
| Alberta | $17,993 (10.0%) | $15,587 (22.1%) |
| Manitoba | $17,176 (14.1%) | $14,610 (27.0%) |
| Quebec | $16,722 (16.4%) | $14,214 (28.9%) |
| Nova Scotia | $16,363 (18.2%) | $13,907 (30.5%) |
| New Brunswick | Not shown: 2026 low-income tax reduction not yet published | |
| Newfoundland and Labrador | Not shown: 2026 low-income tax reduction not yet published | |
| Prince Edward Island | Not shown: 2026 low-income tax reduction not yet published | |
Personal income tax only, calculated the same way as the calculator above: corporate tax, OAS, GIS and Canada Child Benefit effects are not included, and the corporation paying the dividend decides whether it is eligible. New Brunswick, Newfoundland and Labrador, Prince Edward Island are left out because their 2026 low-income tax reductions are set on provincial forms the CRA has not published yet. Use Compare provinces for this dividend in the calculator to run your own figures. How the gross-up and credit work is explained in the dividend tax credit guide.
Frequently asked questions
What is the difference between eligible and non-eligible dividends in Canada?
Eligible dividends are paid by public corporations and large CCPCs from income taxed at the general corporate rate. They receive a 38% gross-up and a larger dividend tax credit, resulting in lower tax. Non-eligible dividends are paid from income taxed at the small business rate, receive a 15% gross-up, and carry a smaller tax credit.
How does the dividend gross-up and tax credit work?
The dividend is 'grossed up' to approximate the corporation's pre-tax income, then a Dividend Tax Credit (DTC) is applied to account for corporate taxes already paid. This integration mechanism ensures dividend income is not double-taxed at both the corporate and personal level.
Can I earn dividends tax-free in Canada?
Largely, at low income levels: the dividend tax credit can cancel most or all of the tax on the grossed-up dividend. The credits are non-refundable and only reduce tax at their own level, so some provinces still charge tax — for example Nova Scotia and Newfoundland and Labrador, and Ontario through the Ontario Health Premium, which no credit reduces. You can also earn dividends completely tax-free inside a TFSA or defer tax by holding them in an RRSP.
Sources
Reflects 2026 tax year rates.
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