Newfoundland Tax: Income, HST, and Other Provincial Taxes

The Canadian province of Newfoundland and Labrador has a distinct tax system that functions alongside federal regulations, and residents pay both federal and provincial taxes. The provincial government levies several direct and indirect taxes that impact individuals and businesses. These include personal income tax, sales tax, and other specific taxes.

Provincial Personal Income Tax

Newfoundland and Labrador’s personal income tax is calculated on a taxpayer’s taxable income, a figure determined after all federal deductions are applied. The province uses a progressive tax structure, meaning the rate of tax increases as income rises. This system is structured through a series of income brackets, and the provincial tax is added to the federal tax liability to determine a resident’s total income tax payable.

Marginal tax rates mean that individuals pay the specified rate only on the portion of their income that falls within a particular bracket. A person earning income in a higher bracket does not pay that higher rate on their entire income, but instead pays lower rates on the income in preceding brackets. This method ensures a gradual increase in the overall tax rate as income grows.

For the 2025 tax year, Newfoundland and Labrador has established specific income thresholds and corresponding tax rates.

• Income up to $44,192 is taxed at a rate of 8.7%.
• Income between $44,193 and $88,382 is taxed at a rate of 14.5%.
• Income from $88,383 to $157,792 is taxed at a rate of 15.8%.
• Income from $157,793 to $220,910 is taxed at a rate of 17.8%.

Income above these levels is subject to progressively higher rates, and these provincial tax amounts are calculated on the annual income tax return.

Key Provincial Tax Credits and Reductions

After calculating gross provincial income tax, taxpayers can apply various credits to reduce the amount they owe. A primary mechanism for this is the Newfoundland and Labrador Low-Income Tax Reduction. This program helps low-income individuals and families by reducing or eliminating their provincial income tax liability. The reduction is based on net income thresholds and is gradually phased out as income increases.

Another non-refundable tax credit is the Basic Personal Amount (BPA). Every resident is entitled to claim this amount, which represents a portion of income that can be earned tax-free. For the 2025 tax year, the provincial Basic Personal Amount is $11,067. This credit is calculated by multiplying the BPA by the lowest provincial tax rate, providing a base level of tax relief to all taxpayers.

Harmonized Sales Tax (HST)

Newfoundland and Labrador uses a Harmonized Sales Tax (HST), which combines the federal Goods and Services Tax (GST) and a provincial sales tax into a single rate. This consumption tax is applied to the sale of most goods and services transacted within the province. The total HST rate is 15%, which is composed of the 5% federal GST and a 10% provincial component.

To help offset the tax’s impact on lower-income individuals and families, the province administers the Newfoundland and Labrador HST Credit. This is a tax-free, quarterly payment made to eligible residents based on adjusted family net income. The amount received depends on income level and household composition, and payments are issued automatically to those who file an annual tax return and meet the criteria.

Other Common Provincial Taxes

Beyond income and sales taxes, residents of Newfoundland and Labrador encounter other specific provincial taxes. The Gasoline Tax is applied as a fixed amount per litre of gasoline and diesel purchased in the province. This tax is built directly into the price paid at the pump.

The province also levies a Tobacco Tax on cigarettes, cigars, and other tobacco products to discourage smoking by increasing their cost. The rates are applied per cigarette or per gram of tobacco and are among the highest in the country.