Tax burden hits 42.3% of income, highest since the 1960s
A new study from the Fraser Institute reveals that the average Canadian family paid 42.3% of its income in taxes in 2024, outpacing what it spends on housing, food, and clothing combined. Based on an estimated average income of $114,289, this translates to $48,306 in total taxes paid to all levels of government.
By comparison, families spent just 35.5% of their income on the three main essentials: 22% on housing, 11% on food, and 2% on clothing. This marks a significant shift from 1961, when only 33.5% of income went to taxes and 56.5% to basic needs.
Taxes remain families’ single largest expense
The Fraser Institute’s breakdown of the tax burden includes federal, provincial, and municipal levies. Income tax alone accounted for 31.2% of the total, with payroll and health taxes adding another 21.4%. Sales taxes contributed 14.1%, followed by profit taxes at 13.5%, and property tax at 8.5%.
Other taxes — including excise taxes on alcohol and tobacco, carbon taxes, import duties, and vehicle-related charges — made up the remaining 11.3%. Although businesses pay many of these taxes directly, researchers argue the costs are ultimately passed down to consumers through higher prices.
Spending patterns have reversed since 1961
The long-term shift in Canadian household finances is stark. In 1961, families allocated the bulk of their income to essentials and paid relatively little in taxes. By 1981, the balance had nearly evened out, with taxes and necessities each consuming around 40% of income. Today, the tax burden clearly outweighs spending on basic needs.
The only significant exception in recent history was in 2020, during the COVID-19 pandemic. That year, tax revenues temporarily declined while household income rose, lowering the average tax bill. Since then, the burden has returned to — and now exceeds — pre-pandemic levels, although it remains comparable to those seen throughout the 2010s.
Understanding what Canadians actually pay
Researchers emphasize that whether Canadians view this tax bill as justified or not, the important point is awareness. From income and sales taxes to fuel and import duties, the combined impact of direct and indirect taxation is substantial. The study advocates for greater transparency and dialogue around what families pay and what they receive in return.
