Prince Edward Island residents pay both provincial and federal income tax under a progressive bracket system. Knowing which PEI tax bracket your income falls into helps you plan your finances, estimate your refund, and make smarter decisions around RRSP contributions, TFSA savings, and other tax planning strategies.
Below are the 2025 and 2024 PEI provincial tax brackets along with the federal brackets that apply to all island residents. For a quick take-home estimate use the Canada salary after tax calculators.
PEI 2025 provincial tax brackets
These are the Prince Edward Island provincial income tax rates for the 2025 tax year. PEI indexes its bracket thresholds annually using the provincial Consumer Price Index:
| PEI Provincial Tax Bracket | Tax Rate |
|---|---|
| First $33,328 | 9.65% |
| Over $33,328 up to $64,656 | 13.63% |
| Over $64,656 up to $105,000 | 16.65% |
| Over $105,000 up to $140,000 | 18.00% |
| Over $140,000 | 18.75% |
PEI has some of the higher provincial tax rates in Canada, particularly at the lower income levels. The bottom bracket rate of 9.65% is nearly double Ontario’s 5.05% starting rate. This means PEI residents earning modest incomes pay a proportionally higher share of provincial tax compared to those in several other provinces.
PEI surtax
PEI also applies a surtax of 10% on basic provincial tax exceeding $12,500. This effectively raises the marginal tax rate for higher-income earners on the island and pushes the top combined rate above 51%.
PEI 2024 provincial tax brackets
These are the PEI provincial brackets that applied for the 2024 tax year for filing your 2024 return:
| PEI Provincial Tax Bracket | Tax Rate |
|---|---|
| First $32,656 | 9.65% |
| Over $32,656 up to $64,313 | 13.63% |
| Over $64,313 up to $105,000 | 16.65% |
| Over $105,000 up to $140,000 | 18.00% |
| Over $140,000 | 18.75% |
The key change between 2024 and 2025 is the indexation of the lower two bracket thresholds. The first bracket moved from $32,656 to $33,328 and the second from $64,313 to $64,656 while the rates themselves remained the same.
Federal tax brackets 2025
Federal income tax brackets apply to all PEI residents in addition to the provincial rates above:
| Federal Tax Bracket | Tax Rate |
|---|---|
| $57,375 or less | 15.00% |
| $57,375 to $114,750 | 20.50% |
| $114,750 to $177,882 | 26.00% |
| $177,882 to $253,414 | 29.00% |
| More than $253,414 | 33.00% |
Federal tax brackets 2024
These are the 2024 federal brackets for reference when filing your 2024 return:
| Federal Tax Bracket | Tax Rate |
|---|---|
| $55,867 or less | 15.00% |
| $55,867 to $111,733 | 20.50% |
| $111,733 to $173,205 | 26.00% |
| $173,205 to $246,752 | 29.00% |
| More than $246,752 | 33.00% |
Combined PEI and federal marginal tax rates 2025
When you combine PEI provincial rates with federal rates, these are the combined marginal rates for 2025:
| Taxable Income Range | Combined Marginal Rate |
|---|---|
| Up to $33,328 | 24.65% |
| $33,328 to $57,375 | 28.63% |
| $57,375 to $64,656 | 34.13% |
| $64,656 to $105,000 | 31.65% |
| $105,000 to $114,750 | 38.50% |
| $114,750 to $140,000 | 44.50% |
| $140,000 to $177,882 | 44.75% |
| $177,882 to $253,414 | 47.75% |
| Over $253,414 | 51.75% |
These combined rates are useful when comparing potential income across provinces. PEI’s higher provincial rates mean the overall tax burden is above the Canadian average, particularly for middle-income earners.
How to calculate your PEI income tax
Here is an example calculation for someone earning $70,000 in PEI for 2025:
Provincial tax:
- 9.65% on the first $33,328 = $3,216.15
- 13.63% on income from $33,328 to $64,656 ($31,328) = $4,270.03
- 16.65% on income from $64,656 to $70,000 ($5,344) = $889.78
- Total PEI provincial tax = $8,375.96
Federal tax:
- 15% on the first $57,375 = $8,606.25
- 20.5% on income from $57,375 to $70,000 ($12,625) = $2,588.13
- Total federal tax = $11,194.38
Combined tax on $70,000 ≈ $19,570 before credits such as the basic personal amount.
The average income in PEI is $44,200 which places most island earners in the 28.63% combined marginal bracket.
PEI tax credits and deductions
Several credits can help reduce your PEI tax bill:
- Basic personal amount: The PEI basic personal amount for 2025 is approximately $12,750 and the federal amount is $16,129. Income up to these amounts is effectively tax-free.
- RRSP contributions: Contributions reduce your taxable income dollar-for-dollar. See the RRSP contribution limit guide for current maximums.
- PEI sales tax credit: Low and moderate-income PEI residents can receive a refundable sales tax credit.
- TFSA: While TFSA contributions are not deductible, all investment growth and withdrawals are tax-free.
If you are selling property or investments in PEI, use the PEI capital gains tax calculator to estimate the tax on your gains under the current inclusion rates.
How PEI compares to other provinces
PEI has one of the higher provincial tax burdens in Atlantic Canada. The top combined marginal rate of 51.75% compares to Nova Scotia at 54%, New Brunswick at 52.5%, and Newfoundland at 54.8%. However, PEI’s lower cost of living and relatively affordable housing market can offset some of the tax difference for those relocating to the island.
The PEI hourly to salary calculator can help you convert your hourly wage to an annual after-tax income based on these PEI rates.
Frequently asked questions
What are the PEI tax brackets for 2025?
PEI has five provincial tax brackets for 2025: 9.65% on the first $33,328, 13.63% from $33,328 to $64,656, 16.65% from $64,656 to $105,000, 18.00% from $105,000 to $140,000, and 18.75% on income over $140,000.
What is the top marginal tax rate in PEI?
The top combined federal and PEI marginal tax rate for 2025 is approximately 51.75% on taxable income over $253,414. This includes the PEI surtax on higher earners.
Does PEI have a surtax?
Yes. PEI levies a surtax of 10% on basic provincial tax exceeding $12,500 which increases the effective tax rate for higher income earners on the island.
How does PEI tax compare to Nova Scotia?
PEI’s top combined rate of 51.75% is lower than Nova Scotia’s top combined rate of approximately 54%. However, PEI’s lower bracket rates tend to be higher than Nova Scotia’s, meaning moderate-income earners in PEI may pay more provincial tax.
When do the 2025 PEI tax brackets apply?
The 2025 brackets apply to income earned from January 1 to December 31, 2025. You will use them when filing your return in early 2026. For your 2024 return filed in spring 2025, use the 2024 brackets listed above.
Related guides
- PEI capital gains tax calculator
- PEI sales tax calculator
- PEI hourly to salary calculator
- Average income in PEI
- PEI land transfer tax calculator
- Canada income percentile calculator
