About the Canada Dividend Tax Credit Calculator
This Canadian dividend tax credit calculator shows how dividends from Canadian corporations are taxed for the 2026 tax year. Enter your eligible dividends (typically from public companies), non-eligible dividends (typically from a small business corporation you own), your other taxable income and your province or territory; it grosses the dividends up, applies the federal and provincial dividend tax credits and works out the extra tax the dividends actually cost you.
Eligible dividends are grossed up by 38% and earn a federal credit of 15.0198% of the grossed-up amount; non-eligible dividends are grossed up by 15% with a federal credit of 9.0301%. Each province adds its own credit. Because the credits are designed to refund the corporate tax already paid, eligible dividends can be almost tax-free for people with modest income — and the gross-up can still raise income-tested amounts such as OAS clawback or the Ontario Health Premium.
Federal and provincial brackets and basic personal amounts are CRA’s 2026 figures. Provincial dividend tax credit rates are the latest published (from the 2025 provincial worksheets) because 2026 forms are not out yet. Only the basic personal amount credits are included, and Quebec and Manitoba are not covered (Quebec has its own return, and Manitoba’s 2026 basic personal amount is income-tested). Provincial low-income reductions and the federal alternative minimum tax are ignored.
With the default inputs, the tax on your dividends is $788.97. Change any value above to recalculate instantly.
How to use the canada dividend tax credit calculator
- 1Choose your province or territory of residence on December 31.
- 2Enter the actual eligible and non-eligible dividends from your T5 or T3 slips.
- 3Enter your other taxable income for the year.
- 4Read the grossed-up amount, the credits and the real tax on your dividends.
Formula and method
Dividends are first grossed up to approximate the pre-tax corporate income they came from: eligible dividends by 38% and non-eligible dividends by 15%. The grossed-up amount is added to your taxable income and taxed at the 2026 federal rates (14%, 20.5%, 26%, 29% and 33%) and your province’s rates. The dividend tax credits — federal 15.0198% and 9.0301% of the taxable amounts, plus the provincial rates shown in the table — then reduce your tax, but only to zero.
The tax on your dividends is the difference between your total tax with and without them, after the basic personal amount credits. In Ontario the surtax is calculated before the provincial dividend credit and the Ontario Health Premium is based on taxable income including the gross-up. Marginal rates are measured by adding $100 more of each type of dividend.
- 1.38 / 1.15
- Gross-up factors for eligible and non-eligible dividends
- DTC
- Dividend tax credit (non-refundable)
Worked examples
$10,000 eligible dividends on $60,000 income in Ontario
The $10,000 is grossed up to $13,800 and taxed at 29.65% (20.5% federal + 9.15% Ontario) = $4,091.70, plus $150 more Ontario Health Premium. Credits of $2,072.73 federal and $1,380 Ontario bring the tax on the dividends down to $788.97 — under 8%.
$20,000 of eligible dividends and no other income in Alberta
The $27,600 taxable amount creates $3,864 of federal and $2,208 of Alberta tax before credits, but the basic personal amounts and dividend tax credits wipe both out, so the dividends are tax-free.
$15,000 non-eligible dividends on $100,000 in BC
Non-eligible dividends are grossed up 15% to $17,250. Federal and BC tax on that slice is reduced by $1,557.69 and $338.10 of credits, leaving $3,471.27 — about 23% of the cash dividend.
$50,000 eligible dividends on $250,000 in Ontario
At the top of the brackets the $69,000 grossed-up amount attracts federal, Ontario and surtax charges; after $10,363.66 federal and $6,900 Ontario credits the dividends cost $19,357.50, an effective 38.7%.
Frequently asked questions
What is the dividend tax credit in Canada?+
A non-refundable credit that reduces tax on dividends from taxable Canadian corporations, recognising that the company already paid corporate tax. Federally it is 15.0198% of grossed-up eligible dividends and 9.0301% of grossed-up non-eligible dividends.
What is the difference between eligible and non-eligible dividends?+
Eligible dividends are paid from income taxed at the general corporate rate, mostly by public companies, and get a 38% gross-up with a larger credit. Non-eligible dividends come from income taxed at the small business rate and get a 15% gross-up with a smaller credit.
Why do I pay tax on more than I received?+
The gross-up adds 38% or 15% to your actual dividend to approximate the company’s pre-tax profit. You pay tax on that larger amount, then the dividend tax credit gives back roughly the corporate tax already paid.
Can dividends be tax-free in Canada?+
Yes, at low incomes. With no other income, this calculator finds about $80,000 of eligible dividends can be received free of federal and provincial income tax in Alberta or BC for 2026, but far less in Ontario, where the Health Premium starts once taxable income passes $20,000. Unused credits are never refunded.
Do dividends affect OAS or benefits?+
Yes. Benefits and clawbacks such as the OAS recovery tax, GIS and the Canada Child Benefit use net income, which includes the grossed-up dividend, so dividends can reduce benefits more than the same amount of interest.
Are dividends from US stocks eligible for the credit?+
No. Only dividends from taxable Canadian corporations qualify. Foreign dividends are taxed in full as ordinary income, though you may claim a foreign tax credit for withholding tax paid.
Tax results are estimates based on published rules and simplified assumptions. They are not tax advice — check official guidance or a tax professional for your situation.
Sources
- CRA — Tax rates and income brackets for individuals (2026)
- CRA — T4127 Payroll Deductions Formulas, July 2026
- CRA — Federal Worksheet 5000-D1 (dividend gross-up and tax credit)
- CRA — Form ON428 Ontario Tax (surtax, health premium)
- CRA — Worksheet ON428 (Ontario dividend tax credit)
- CRA — Worksheet BC428 (BC dividend tax credit)