Prince Edward Island is Canada’s smallest province, in both population and land size. Despite its small size, visitors flock from all over to enjoy its beautiful rolling hills, beaches, and charming island culture.
PEI’s Tax Structure & How it all works
As with most provinces, Prince Edward Island uses a progressive tax structure with only three tax brackets. The brackets may increase each year, based on inflation. Visit the CRA’s Prince Edward Island page for this year’s tax bracket rates.
There is an allowable amount of income that you can earn before you must start paying taxes. That is called the “basic personal” or “personal amount.” For the 2021 tax year, the Federal Basic Personal Amount (BPA) is $13,808, while the Prince Edward Island amount is $10,500.
Prince Edward Island’s Income Tax Rates for Tax Year 2021
Tax Rate |
Tax Bracket |
Taxable Annual Income |
| 9.8% | on the first $31,984 | $31,984 |
| 13.8% | on the next $31,985 | over $31,984 up to $63,969 |
| 16.7% | on the portion over $63,969 | over $63,969 |
For 2020 tax rates, review this link from the Canadian Government.
Prince Edward Island has a tax system similar to other Canadian provinces. Many of the provincial taxes and credits for residents of Prince Edward Island compliment similar credits at the federal level, but there are some unique credits for residents of Prince Edward Island.
Prince Edward Island Provincial Tax Credits
- (New 2021) – Children’s Wellness Tax Credit: A credit providing relief to families with children in any organized activities. This is a non-refundable credit of $500. To learn more view this link from the provincial site.
- PEI’s low-income tax reduction: You may claim this reduction if you were a resident of PEI on December 31st of the taxation year in question; 19 years of age or older, you had a spouse/common law partner or were a parent. Visit this link from the CRA for more detailed information.
- PEI’s Volunteer Firefighter Tax Credit: Residents of Prince Edward Island can claim a $500 refundable credit for volunteering as a firefighter. Learn more on how to claim this credit on your taxes in this CRA link.
- Teacher school supply amount: Teachers in the early learning and child care centers, may be eligible for a $500 credit, for expenses incurred for school supplies. This link from the CRA will explain.
A complete list of Non-Refundable Tax Credits and other credits or deductions for Prince Edward Island residents can be found in the following CRA link: Prince Edward Island Tax and Credits.
For Federal Tax Rates, review the following link from TurboTax: Canada’s Federal Personal Income Tax Brackets and Tax Rates
Key Points to Remember*:
- Tax bracket amounts usually change yearly, due to inflation.
- Review provincial credits, as there may be new ones each fiscal year.
- Be able to differentiate between your provincial and federal tax rates & credits
*Read the entire above article for specific details.