Tax bill tops the basics
Photo: Fraser Institute
How the average Canadian family spends their money each year.
While inflation is causing the necessities of life to cost more than ever, a recent study has found that your tax bill is growing just as quickly.
The study by the Fraser Institute found the average Canadian family spent 42% of income on taxes, more than on housing, food and clothing combined.
In 2025, the average Canadian family earned an income of $121,111 and paid total taxes equaling $50,721.
“At a time when the cost of living is top of mind across the country, taxes remain the largest household expense for Canadian families,” said Jake Fuss, director of fiscal studies at the Fraser Institute and co-author of the study.
“While Canadians can decide for themselves whether or not they get good value for their tax dollars, they should understand how much they pay in taxes each year and how much the tax burden has grown relative to other necessary costs they must pay.”
The study points out that the average Canadian family in 1961 had a household income of $5,000 and had a total tax bill of $1,675, or just 33.5% of their income.
That figure, however, comes from before the completion of the rollout of universal healthcare in Canada in 1971. Healthcare is the largest line item in every provincial budget.
The Fraser Institute’s study shows the typical Canadian family in 1974 made $12,500 per year and paid $5,429 in taxes, or 43% of income.
The percentage of the average household income going towards taxes has, generally, hovered in the 42 to 45 per cent level since the rollout of universal healthcare in the early 1970s.
Using a 1974 baseline, the typical Canadian household’s tax bill has climbed by 834%, surpassed only by shelter costs at 1106%. Food has gone up 471% and clothing up 207%.
The study notes that deficit spending by governments over the decades has the effect of essentially deferring taxes for later years.
“The total tax bill of the average family would be much higher than it actually is if, instead of financing its expenditures with deficits, all Canadian governments had simply increased tax rates to balance their budgets,” said the study.