Dividend tax calculator (2026)

In three steps. First the gross-up: eligible dividends are reported at 138% of the cash received and non-eligible dividends at 115%, so a $10,000 eligible dividend adds $13,800 to taxable income. Then income tax is calculated on that higher amount. Then the dividend tax credits come off: 15.0198% of the grossed-up amount federally for eligible dividends (9.0301% for non-eligible), plus a provincial credit that varies by province. The credits recognise the corporate tax already paid on the earnings behind the dividend.

Eligible dividends come from income taxed at the general corporate rate: mostly public companies and large private corporations. Non-eligible dividends come from income that benefited from the small business deduction: typically a Canadian-controlled private corporation paying out of its low-taxed earnings. Your T5 slip reports them separately, so you do not have to guess: box 24 is the eligible amount, box 25 the taxable amount, and box 26 the federal credit. Eligible dividends get the bigger gross-up and the bigger credit, so they are taxed at a lower rate.

Yes, at low incomes. On a $50,000 salary in BC, $10,000 of eligible dividends costs -$656 in tax: an effective rate of -6.6%, so you keep $10,656 of the $10,000. The dividend tax credits ($3,729 here) are worth more than the tax the dividends themselves generate, so the dividends cut the tax on the other income. The credits are non-refundable, so they can only reduce your total tax to zero, never below it.

Eligible dividends cost $520 (5.2%), so you keep $9,480. The same $10,000 as non-eligible dividends costs $1,909 (19.1%), so you keep $8,091. The gap is the credit: non-eligible dividends get a smaller gross-up ($11,500 reported instead of $13,800) but a much smaller credit ($1,382 instead of $3,453).

On the same $75,000 salary and $10,000 of eligible dividends, Quebec costs $1,487 (14.9%) against $520 in Ontario. Quebec's provincial rates are higher, and the federal dividend tax credit is worth 16.5% less to a Quebec resident because the federal abatement is calculated on federal tax after credits. The Quebec provincial credit ($1,615) is larger than Ontario's ($1,380), but not by enough to close the gap.

Yes. The gross-up raises your taxable income even though you never receive that extra amount: $10,000 of eligible dividends is reported as $13,800. That higher taxable income can trigger the OAS recovery tax and reduce income-tested benefits, which is why dividends can cost more than the tax on the dividends alone suggests. This calculator shows the income tax on the dividends only; it does not quantify benefit clawbacks.

Foreign dividends get no gross-up and no dividend tax credit, so they are not covered by this calculator: they are taxed as ordinary income at your marginal rate. This calculator also leaves out the alternative minimum tax, other deductions and credits on your return, and sheltering the dividends inside an RRSP or TFSA, where they are not taxed in the year at all. The figures assume the dividends are your only investment income and that your other income is as entered.