5 Tax Tips for Your First Job

Deductions aside, how can you make the most of your new income? Here's a checklist to help you get organized and manage your money even before that first payment lands in your bank account.

Set up direct deposit for paycheques

If your employer can facilitate it, setting up direct deposit to your bank account makes getting paid easy. To do this, you will need to know your bank's or credit union's nine-digit routing number and transit or branch number, plus your account number, all of which can be found printed at the bottom of a personal cheque. But don't worry if you don't have personal cheques—most financial institutions make it easy to download a void cheque or direct deposit form with all the info you need, right from online banking.

Your new employer may also ask you to fill out a TD1 Tax Form (Personal Tax Credits Return), which is used to calculate how much income tax it will deduct from your paycheque. The TD1 reflects your non-refundable tax credits and deductions. These can change over time—for example, if you get married or have a baby—so you may need to submit a new TD1 in the future. You can also use a TD1 form to request that more or less income tax be withheld from your pay. (Getting a big refund at tax time is exciting, yes, but it could mean you overpaid taxes all year long.)

Understand the numbers on your pay stub

Pay stubs have lots of numbers—what do they all mean? Let's break them down.

The first half of the stub is an overview of your gross (pre-tax) pay: how much money you've made from working regular and, if applicable, overtime hours, plus any vacation and statutory holiday pay. Typically, a pay stub will have two columns of dollar amounts, one that lists your pay for the current period and another that shows your cumulative year-to-date amounts.

Then come the deductions taken from your gross pay, which are remitted (transferred) by your employer to the CRA. What's left over is your net pay, a.k.a. your take-home pay. Here's a brief overview of pay deductions.

Term	What it means
Personal income tax	Your employer will deduct both federal and provincial/territorial income tax. The amount of tax depends on which tax brackets you fall into. (Use TurboTax's income tax calculator.)
Employment Insurance (EI)	EI provides temporary income support if you are laid off or take time off work for illness, caregiving duties, or certain other reasons.
Canada Pension Plan (CPP) or Quebec Pension Plan (QPP)	These Social Insurance funds pay a monthly taxable benefit that replaces a portion of your income once you retire.
Group insurance plan	If you're enrolled in your company's insurance package, your premiums will be automatically deducted from your pay.
RRSP savings plan	If you enrol in a group RRSP plan to save for retirement, your employer will set up regular deductions from your pay.
Quebec Parental Insurance Plan (QPIP)	In Quebec, employers make a deduction for the QPIP and a smaller deduction for EI.
Other deductions	These can include union dues, an employee stock purchase plan, or an employee stock ownership plan.

What if you work casually or only get paid in cash?

If you have a more casual job like babysitting, dogwalking, or house painting, no one is making payroll deductions for you, such as income tax, EI, and CPP. It's a good idea to set aside some of your income for tax time.

• Income tax: You can earn up to a certain amount without paying federal income tax. In 2025, the basic personal amount (BPA) is $16,129. Each province and territory also has a BPA.

• Employment insurance (EI): As someone who's self-employed, you don't have to contribute unless you opt into the program. If you do, you'll pay your EI premium when you file your tax return.
• Canada Pension Plan: You don't plan to retire for many years, so do you really have to contribute to CPP? If you earn more than the basic exemption amount set by the government for each tax year, the answer is yes. The amount for 2025 is $3,500 (and it's the same in 2026). Currently, the CPP contribution rate is 5.95% for employers and employees. As a self-employed person, you must pay both portions (11.9%), up to the self-employed maximum ($8,068.20 in 2025 and $8,460.90 in 2026), when you file your tax return. Think of it this way: your future self will thank you for starting CPP contributions early.

 

Keep good financial records

The Canada Revenue Agency (CRA), which administers tax laws for the federal government and most of the provinces and territories, requires that you keep financial records for at least six years after filing your tax return.

This six-year rule applies to any forms or documents related to tax filing, including Notice of Assessment documents from previous tax returns, receipts for medical or work-from-home expenses, T2202 (Tuition and Enrolment Certificate) tax slips, and payments you've earned through a side hustle.

File your taxes every year

Every year, you must file a tax return to report your income, including money you earn from your day job, side hustles, tips, commissions, and contract work. If you have a year with very little or no income, it's still important to file a tax return. Many government benefits and tax credits are only available if you filed a return the year before. Filing a tax return also creates RRSP contribution room you can use in the future.

If you work for an employer, it will issue you a T4 slip: Statement of Remuneration Paid at the end of February. The T4 summarizes your income and deductions for the year.

If you're self-employed, it's a good idea to set aside money for income tax, EI, and other deductions at tax time. Here's another benefit of filing a tax return: if you pay for work-related tools, materials, advertising, services, or utilities for your business, you may be able to claim these expenses at tax time, reducing your taxable income.

What is the tax-filing deadline?

The CRA typically opens NETFILE, its electronic filing service that will allow you to upload a tax return, in early February. Filing your taxes online is quick and convenient. Many Canadians do it themselves using tax-filing software such as TurboTax Online. It submits your return securely to NETFILE when you're ready.

If you owe taxes, your tax return and payment are due by April 30. If you or your spouse or common-law partner are self-employed, any taxes you owe are still due by April 30 but your tax-filing deadline is extended to June 15.

If a standard tax-filing deadline falls on a weekend, the actual deadline is the next business day. Either way, don't wait until the last minute to file, in case you're missing any tax slips you need.

If you file late and you owe taxes, the CRA will apply a 5% late fee on the unpaid amount, and 1% for each full month you continue to owe, for up to 12 months. Another good reason to file on time: you need to file a tax return to access government benefits and credits, including the Canada Child Benefit, GST/HST credit, and more.

How much tax do I pay at my first job?

Your pay stub shows the federal and provincial/territorial income tax deducted from your income. While provincial and territorial taxes vary, federal marginal tax rates are the same for all Canadians. Below are the federal tax rates and tax brackets for 2025. If you're self-employed, you can use this info, plus your province's or territory's tax brackets, to estimate how much tax you'll owe.

Federal income tax rates	Federal income tax brackets
14.5%*	$57,375 or less, plus
20.5%	Over $57,375 up to $114,750, plus
26%	Over $114,750 up to $177,882, plus
29%	Over $177,882 up to $253,414, plus
33%	More than $253,414

*The federal government's proposed tax rate change for the lowest tax bracket, from 15% to 14%, came into effect mid-year on July 1, 2025, so the effective tax rate for 2025 is 14.5%.

Optimize your tax credits and tax deductions

You might qualify for tax credits and deductions that lower how much tax you have to pay. What's the difference between a tax credit and a tax deduction? Deductions reduce your total taxable income, while refundable and non-refundable credits lower your tax liability.

You can claim credits for eligible medical expenses and charitable donations, for example. If you moved to a new home after landing your first job, you might be able to claim moving expenses. If your income is below a certain threshold, you may qualify for the Canada Workers Benefit (CWB).

Other smart moves are to:

• Fund your retirement. Contributing to a Registered Retirement Savings Plan (RRSP) will lower your taxable income for the calendar year. Lots of companies also match RRSP contributions, so it's a win-win scenario for year-end tax savings and retirement planning.
• Carry forward your tuition amounts. If you have leftover tuition tax credits, you can carry them forward or transfer them to your spouse or another family member.
• Contribute to a First Home Savings Account (FHSA). FHSA contributions are tax-deductible. You can contribute up to $8,000 per year, and the lifetime maximum is $40,000.

What is an employer pension plan? Should I join?

This is a registered plan that helps you save money for retirement. Your employer will match a certain percentage or dollar amount of what you contribute—it's like getting free money. Retirement might be many decades from now, but the combination of employer matching and long-term compounding could mean a sizable nest egg for your future.

File your first tax return with confidence

Filing your tax return is fast and easy with TurboTax Online. Just answer some simple questions and we'll guide you through the process, plus we'll find all of the tax credits and deductions you're eligible for.

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