Many Canadians feel a sense of dread when tax season rolls around. One of the most common misconceptions we hear is:
“I don’t want a raise because it will push me into a higher tax bracket and I’ll actually take home less money.”
We’re here to clear the air. To understand how our tax system works—and how you can use it to your advantage—we like to use the “Filling Up Cups” analogy.
The Mason Jar Method: $100,000 View
Imagine your annual income is like water being poured into a series of jars. You don’t pay one single tax rate on all your money; instead, you fill the jars in order. You only move to the next jar once the prior jar is completely full.
Your Jars at $100,000 Income
Jar 1: Tax-Free
0%
Jar 2: Starter
~26%
Jar 3: Middle
~36%
Jar 4: High
~46%+
2026 Combined Tax Brackets (Quebec)
| Income Range | Marginal Tax Rate | The “Jar” |
|---|---|---|
| $0 to ~$18,500 | 0.00% | Jar 1 (Tax-Free) |
| $18,501 to $54,345 | 25.69% | Jar 2 (Starter) |
| $54,346 to $58,523 | 30.69% | Jar 2 (Overflow) |
| $58,524 to $108,680 | 36.12% | Jar 3 (Where you are!) |
| Over $132,245 | 47.46% to 53.31% | Jar 4 (The Top) |
How the Money Flows
1. The Tax-Free Foundation: Your first dollars go into Jar 1. This jar has no lid—the government doesn’t touch it.
2. Successive Filling: Once Jar 1 is full, only the additional money flows into Jar 2. Even if you earn $100,000, those first $18,500 are still tax-free.
3. The RRSP “Siphon”: At $100,000, you are pouring into Jar 3 at a 36.12% rate. When you put $10,000 into an RRSP, you are pulling $10,000 out of that 36% jar today. That’s a $3,612 refund back in your pocket.
Which “Jar” are you currently filling?
Understanding your highest tax bracket is the first step to making your RRSP work for you.