Terms and explainers
Public-finance terms in plain language
Short explanations for the concepts that appear in TaxHours. These definitions are educational descriptions, not legal or tax advice.
- Marginal and average tax rates
- A marginal rate applies to the next dollar in a bracket. An average rate is total income tax divided by income. Moving into a bracket does not apply that rate to all income.
- Payroll deductions
- CPP or QPP, EI, and QPIP where applicable are employee contributions or premiums. They are shown separately from income tax and are not allocated across the general budget categories.
- Federal and provincial responsibilities
- Canada and provinces or territories raise and spend money through different systems. The calculator separates federal income tax from provincial or territorial income tax before showing spending shares.
- Calendar year and fiscal year
- Your tax-time estimate refers to a calendar year. Government spending sources may use a fiscal year such as 2024-25. The app labels the source year where they differ.
- Actual and estimate
- Published government figures may be actuals, functional statistics, or transformed public categories. Your tax result is an educational estimate using stated parameters, not a tax return.
- Borrowing to cover a shortfall
- When spending is higher than current revenue, the difference is a deficit financed by borrowing. Borrowing is not current revenue.
- Non-tax revenue
- Non-tax revenue can include fees, permits, public-business income, resource royalties, investment income, and sales of goods or services. It is not the same as income tax paid from a paycheque.
- Interest on public debt
- Public debt charges are interest costs on past borrowing. They are distinct from new borrowing in the current year.
- Public spending classifications
- Governments publish spending in different taxonomies. TaxHours preserves source labels and notes whether a view uses official actuals, hybrid actuals, or Statistics Canada functional data.
Example: if a person enters a higher tax bracket, only the portion of income in that next bracket uses the higher marginal rate. It does not apply to every dollar they earn.