Canada Corporate Tax Calculator 2025 β Federal + Provincial
Calculate Canadian corporate income tax with federal (9% small business / 15% general) plus provincial rates. Includes small business deduction analysis.
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Reduces SBD above $50,000 C$0
Total Corporate Tax
0%
Effective Rate
C$0
After-Tax Income
0%
Combined Rate
Tax Breakdown
How to Use This Canada Corporate Tax Calculator
Enter your corporation's active business income and select your province. For CCPCs, the first C$500,000 is taxed at the reduced small business rate (9% federal + provincial SB rate). Income above C$500,000 is taxed at the general rate.
The Formula
SBD income = min(active business income, C$500,000) Γ SBD reduction factor
SBD reduction (passive income clawback) = max(0, passive income β $50,000) Γ 5
Federal tax = SBD income Γ 9% + general income Γ 15%
Provincial tax = SBD income Γ provincial SB rate + general income Γ provincial general rate
Total = federal + provincial
SBD reduction (passive income clawback) = max(0, passive income β $50,000) Γ 5
Federal tax = SBD income Γ 9% + general income Γ 15%
Provincial tax = SBD income Γ provincial SB rate + general income Γ provincial general rate
Total = federal + provincial
Example
Ontario CCPC with C$300,000 active business income, no passive income:
All income qualifies for SBD (under $500K limit)
Federal tax: $300,000 Γ 9% = $27,000
Ontario tax: $300,000 Γ 3.2% = $9,600
Total: $36,600 (12.2% combined rate)
After-tax income: C$263,400
All income qualifies for SBD (under $500K limit)
Federal tax: $300,000 Γ 9% = $27,000
Ontario tax: $300,000 Γ 3.2% = $9,600
Total: $36,600 (12.2% combined rate)
After-tax income: C$263,400
Extended
Small Business Deduction Analysis
Detailed SBD eligibility, passive income clawback, and salary vs dividend comparison
Understand SBD limits, passive income clawback, and how salary vs dividend affects overall tax.
Provincial Rate Comparison (C$300,000 CCPC income)
| Province | SB Rate | General Rate | Combined (SB) | Total Tax |
|---|
Frequently Asked Questions
What is the small business deduction (SBD) in Canada?
The small business deduction reduces the federal corporate tax rate from 15% to 9% on the first C$500,000 of active business income for Canadian-controlled private corporations (CCPCs). Each province also has a reduced small business rate. To qualify, the corporation must be a CCPC and must not be an investment holding company.
Which provinces have the lowest corporate tax rates?
As of 2025, Alberta has the lowest general corporate rate at 8% (combined federal-provincial general rate: 23%). British Columbia is 12% general (27%), Ontario is 11.5% general (26.5%), and Quebec is 11.5% general (26.5%). For small business rates, Manitoba is lowest at 0% on first $500K (combined 9%).
What is the passive income threshold for the SBD?
The SBD is reduced when a CCPC earns more than $50,000 in passive investment income (dividends, interest, capital gains). For every $1 of passive income above $50,000, the SBD limit is reduced by $5. At $150,000+ in passive income, the corporation loses the entire SBD and pays the full 15% federal rate.
How are dividends taxed differently from salary in Canada?
Salary is deductible by the corporation (reducing corporate tax) but is taxable as employment income for the owner. Dividends are paid from after-tax corporate income and receive the dividend tax credit at the personal level. Generally, salary + dividend planning is used to minimize overall tax β the optimal split depends on provincial rates and personal income level.
What is the general rate reduction and M&P deduction?
The general rate reduction reduces the federal rate from 28% to 15% for most corporations. The manufacturing and processing (M&P) deduction provides the same result for M&P income. Together they bring the net federal rate to 15% for large corporations. Small businesses using the SBD pay 9% federal on eligible income instead.