The average Canadian family spent 42.3 per cent of their income on taxes in 2024, according to a new study from the Fraser Institute.
The report from the Fraser Institute showed the average Canadian family, which it estimates to have earned an income of $114,289 last year, paid about $48,306 in total taxes to federal, provincial, and municipal governments.
“At a time when the cost of living is top of mind across the country, taxes remain the largest household expense for Canadian families,” said Jake Fuss, director of fiscal studies at the Fraser Institute in a news release.
Researchers said the average tax bill totals more than 35.5 per cent for housing, food and clothing combined. Broken down further, about 22 per cent was spent on housing, 11 per cent on food and two per cent on clothing.
The study found the average Canadian Family only spent 33.5 per cent of their income on taxes in 1961, with 56.5 per cent going to basic necessities.
The total tax bill
In order to calculate the total tax bill, researchers for the institute calculated the various taxes an average Canadian family pays to federal, provincial, and municipal governments.
That includes income taxes, payroll taxes, health taxes, sales taxes, property taxes, fuel taxes, carbon taxes, vehicle taxes, import taxes, and alcohol and tobacco taxes.
The average Canadian also pays the taxes levied on businesses. Although businesses pay these taxes directly, the cost of business taxation is ultimately passed onto average Canadians.
“While Canadians can decide for themselves whether or not they get good value for their tax dollars, they should understand how much they pay in taxes each year,” said Fuss.
Here is a breakdown of the taxes the average Canadian family pays:
| Taxes | In dollars | As a per cent of taxes |
|---|---|---|
| Income tax | $15,085 | 31.2 per cent |
| Payroll and health taxes | $10,319 | 21.4 per cent |
| Sales taxes | $6,812 | 14.1 per cent |
| Property tax | $4,111 | 8.5 per cent |
| Profit tax | $6,534 | 13.5% |
| Liquor, tobacco, amusement and other excise taxes | $1,640 | 3.4% |
| Fuel, motor vehicle licence and carbon taxes | $1,470 | 3.0% |
| Other taxes | $1,403 | 2.9% |
| Natural resource taxes | $657 | 1.4% |
| Import duties | $275 | 0.6% |
| Total taxes | $48,306 | |
| Total cash income | $114,289 | |
| Taxes as a percentage of cash income | 42.3 per cent |
Taxes versus necessities
Researchers gauged the significance of the increased tax bill on Canadian families by comparing the evolution of the tax rate with the average family’s other major expenditures.
The study found the average family spent 56.5 per cent of its cash income to pay for shelter, food, and clothing in 1961. In the same year, 33.5 per cent of the family’s income went to governments as tax. The spending demands had roughly evened up by 1981 as 40.8 per cent of an average family’s income went to governments in the form of taxes, while 40.5 per cent was spent to provide shelter, food, and clothing.
The one exception was the COVID-19 pandemic when tax revenues fell and income rose in 2020, which caused the tax bill to decline for average Canadian families.
Researchers state declining tax revenues and an increase in family incomes produced an anomaly in 2020 that caused the tax bill to drop temporarily. The years following saw the tax bill increase and exceed pre-COVID-19 levels as government revenues rebounded and the economy recovered. However, since 2022 the tax bill has since dropped back down to levels comparable with those experienced during the 2010s.
