How to estimate your tax refund or amount owing (2025)

When you file your 2025 Canadian income tax return, you'll either get a refund or owe a balance. This depends on whether the total tax withheld from your paycheques during the year exceeds or falls short of the actual tax you owe. The good news is you can get a pretty good idea of your outcome before filing by following a few simple steps.

1. Determine your taxable income

Your starting point is your total income. For most Canadians, this is your employment income (shown on your T4), plus any other taxable amounts such as bonuses or side gigs. Subtract deductions like your Registered Retirement Savings Plan (RRSP) contributions and union dues. The result is your taxable income.

2. Calculate federal and provincial tax

Canada uses a progressive tax system. Both the federal government and your province (or territory) have several tax brackets. To estimate tax, apply the applicable rate to each portion of your taxable income. You can find 2025 federal and provincial brackets on the CRA website.

For example, if you live in Ontario and your taxable income is $60,000, part of your income will be taxed at 15% federally and 5.05% provincially, then the next portion at 20.5% federally and 9.15% provincially, and so on.

3. Subtract non‑refundable credits

Credits reduce the tax you owe. The basic personal amount is available to all taxpayers and shelters about $15,000 of income from federal tax (the exact figure varies by province). Other common credits include the Canada Employment Amount, tuition, disability and caregiver credits. Multiply the total credit amount by the lowest tax rate to find the credit's value.

4. Compare to tax withheld

Your employer withholds federal and provincial tax each pay period based on the TD1 forms you filed. On your T4, this is shown as “Income tax deducted.” If the tax withheld during the year is higher than the tax you owe after credits, you'll receive a refund. If it's lower, you'll have a balance owing.

If your income fluctuates or you have multiple sources of income, the withholding may not match your true obligation. For example, RRSP contributions reduce your tax, which can result in a larger refund if your employer didn't adjust withholding.

5. Use our Tax Refund calculator

To save you from spreadsheet gymnastics, try our Tax Refund calculator. Enter your province, employment income, any additional income and RRSP contributions. We estimate tax withheld based on your pay frequency and compare it to tax owed after credits. There's also an Advanced section where you can override the withheld amount if you know the exact figure from your T4.

The result shows an estimated refund (a negative balance) or amount owing (a positive balance). Remember this is an estimate — CRA rules like rounding, retroactive rate changes or special credits can change the final result.

6. Plan ahead

If you expect to owe, consider adjusting your TD1 forms with your employer to increase withholding, or make quarterly instalment payments to the CRA. If you expect a large refund, think about contributing to an RRSP before the deadline to reduce your tax even further.

Estimating your tax refund or amount owing helps you avoid surprises and plan your finances. Use our calculator to run scenarios with different RRSP contributions or income levels and see how your outcome changes.