SCHEDULE 1: FEDERAL TAX

Schedule 1, Federal Tax, is where federal tax is calculated in detail. In practice, tax software always completes it. It has three parts.

PART A: FEDERAL TAX ON TAXABLE INCOME

Taxable income from line 26000 is placed in the correct bracket column. Each column applies the bracket rate to the amount over the bracket threshold and adds the fixed tax on lower brackets. For 2026 the fixed amounts are approximately $8,193 at $58,523, $20,190 at $117,045, $36,933 at $181,440 and $59,275 at $258,482.

PART B: FEDERAL NON-REFUNDABLE TAX CREDITS

• Lists every credit amount from line 30000 (basic personal amount) to line 34900 (donations).

• Totals the credit amounts and multiplies them by 14 percent (2026).

• Adds the donation credit from Schedule 9 and the Top-Up Tax Credit (line 34990).

• Gives total federal non-refundable credits on line 35000.

PART C: NET FEDERAL TAX

• Federal tax from Part A minus non-refundable credits.

• Minus the federal dividend tax credit (line 40425) and any minimum tax carryover.

• Adds tax on split income from Form T1206 and adjusts for alternative minimum tax.

• Minus the federal foreign tax credit (line 40500) to get basic federal tax.

• Minus the federal political contribution credit (line 41000) and investment tax credits to get net federal tax (line 42000 on the T1).

WORKED EXAMPLE (2026)

Taxable income of $70,000: Part A tax is $8,193 + 20.5% × ($70,000 − $58,523) = $8,193 + $2,353 = $10,546. If total credit amounts are $21,500 (basic personal amount, CPP, EI and the Canada employment amount), credits are $21,500 × 14% = $3,010, leaving net federal tax of about $7,536.