How do your federal carbon tax costs compare to your rebates? This tool helps you calculate that

Carbon taxes have existed in Canada for more than a decade, but they remain a complex and often confusing topic.

Alberta and Quebec adopted limited forms of carbon pricing in 2007, and British Columbia was the first province to introduce a broad-based carbon tax in 2008.

Over the following decade, various provinces followed suit with their own carbon pricing systems, with varying degrees of stringency and applicability.

Some provinces, such as Alberta and Ontario, introduced carbon pricing systems under one government that were later repealed by another government. In Manitoba, plans for a carbon tax were announced in 2017 but then abruptly cancelled by the same government in 2018.

In 2019, the federal carbon tax came into effect. It applies in provinces and territories that don't have carbon pricing systems that Ottawa considers sufficient in the national effort to reduce greenhouse gas emissions.

The federal policy — which includes both a tax on fossil fuels and rebates paid directly to households — has been the subject of much political debate over the past four years.

It has also been the source of much confusion, which is understandable because the policy is not exactly simple.

The federal carbon tax — and rebates — in a nutshell

The amount you pay in carbon tax varies from fuel to fuel. More emissions-intensive fuels are subject to higher tax rates.

The amount you receive in rebates, meanwhile, depends on three criteria:

• The size of your household.
• The province you live in.
• Whether you live in a rural area or a census metropolitian area.

Your rebate is unaffected by how much fuel you actually consume.

This is what creates the financial incentive to reduce your carbon emissions: your rebate is a fixed amount, but you have some control over how much fuel you use. The less fuel you consume, the less tax you pay.

If your fuel usage is below a certain level, your rebate will exceed what you pay in tax. The federal government says 80 per cent of households get more money back in rebates than they pay in carbon taxes, directly.

Of course, that's not the whole story. There are also indirect costs to consider. These are the carbon taxes paid by companies and passed along to you in the form of increased prices on the goods and services you buy.

Indirect costs are harder to calculate precisely, but there are estimates from two different groups of economists that give us a rough idea. These estimates vary depending on how much you spend and which province you live in.

Here, we've tried to simplify all of these things into a single app.

The carbon tax calculator is a tool that helps you get a better sense of how the federal carbon tax is affecting your finances when all these factors are combined.

How do things shake out for your household? Use the app below to figure that out.

Click or tap on the "i" icons for more information about a particular component of the app.

(If the app doesn't appear properly on your mobile device, click here for a standalone version.) 

A note for people in B.C., Quebec and the territories

This app only works for people living in the eight provinces where the federal carbon tax applies.

The federal policy does not apply in British Columbia, which has had its own broad-based carbon tax in place since 2008. Here is more information about the B.C. tax rates and the province's climate action tax credit.

Quebec has its own carbon pricing policy, too. The province has joined with California in a cap-and-trade system that sees greenhouse gas emission credits bought and sold on a carbon market.

The government of the Northwest Territories has also implemented its own carbon tax, which applies locally instead of the federal policy. Here are more details on the N.W.T. system.

The federal carbon tax does apply in Yukon and Nunavut, but the details of the policy are a little different in those territories, in particular when it comes to the rebates.

Here is Yukon-specific information and Nunavut-specific information about how the rebates work in each jurisdiction.

How and when you get the rebates

All of the calculations in the app are based on the current federal carbon tax rate of $65 per tonne of CO2, which took effect on April 1, 2023.

The carbon tax follows the federal government's fiscal year, which runs from April 1 to March 31 of the following calendar year.

The rebates are paid in April, July, October and January.

However, the federal carbon tax didn't take effect in the Atlantic provinces until July 1, 2023.

As such, Atlantic Canadians will only pay the tax for three-quarters of the fiscal year and will receive three quarters' worth of rebate payments, instead of the four quarterly payments that people in Alberta, Saskatchewan, Manitoba and Ontario will receive.

Residents of Nova Scotia, Prince Edward Island and Newfoundland receive rebates in July, October and January.

In New Brunswick, which was a late joiner to the federal system in 2023, there will be no rebate payment in July but there will be a double payment in October, followed by the regular quarterly payment in January.

You receive the payments the same way you receive your income tax refunds or other payments from the federal government. Often, that is through direct deposit into your bank account.

The official name of the rebates are "Climate Action Incentive" payments. They may show up on your bank statement as "CAI" or "CANADA" or "FED" or some combination of those terms.

In order to receive your rebate payment, you need to file your annual tax return

The carbon tax rate is set to increase by $15 per tonne annually, rising next to $80 per tonne on April 1, 2024.

Rebates will also increase as the tax rate increases.

How this app works

The app incorporates data from various official and independent sources to calculate your household's direct carbon tax costs, indirect costs and rebate amounts.

The direct cost data come from the Department of Finance.

For the specific tax rates on various fuels, see this link: Table 1: Federal Fuel Charge Rates for Listed Provinces.

For the rebates, the source data also comes from the federal Finance Department.

Here are the specific rebate amounts for all the provinces except New Brunswick, and for New Brunswick, specifically.

Indirect costs: detailed methodology

The indirect cost estimates come from two sources:

• the Parliamentary Budget Office (PBO)
• economists Jennifer Winter, Brett Dolter and G. Kent Fellows

The estimates from the PBO come from the supplementary data provided alongside its Distributional Analysis of the Federal Fuel Charge, which was published on March 30, 2023.

The PBO shared this data upon request from CBC News, but it is unable to certify or endorse any independent, external calculations made with the data.

The estimates from the other group of economists are part of a research paper that was published in Canadian Public Policy, a peer-reviewed journal that focuses on economic and social issues.

The calculations in their paper were originally done in 2020 dollars and based on a rate of $50 per tonne. Winter shared the underlying data and her advice in adapting it for the purpose of this CBC News app. The original estimates have been adjusted to a rate of $65 per tonne and for inflation so that they are reported in terms of 2023 dollars in this app.

Because New Brunswick was a late joiner to the federal carbon tax, it was not included in the PBO's estimates of indirect costs, so only one estimate is available for that province.

Why do indirect costs vary by income and province?

The estimates of indirect costs depend on your household income and which province you live in.

Why is this?

Income is used as a proxy for spending. Roughly speaking, the more money a household makes, the more money that household is likely to spend. And the more they spend, the more they indirectly pay through price increases in the things they buy.

In their research paper, the economists say "our indirect carbon cost estimates are of the worst-case variety because we assume full pass-through of carbon pricing costs from businesses to households."

In their paper, they use 10 discrete ranges of income for each province, each with a different estimate for indirect costs.

In the PBO estimates, there are five discrete ranges.

This is why the indirect-cost estimates in the app don't scale directly when you change your income input, but rather change suddenly when you pass a certain income threshold.

The province you live in also matters.

As the economists explain in their paper, the estimates "depend on each province's built environment and electricity profile, and household consumption patterns."

For those who really want to delve into the details of what that means: check out Appendix A from their paper.

For the rest of us: it boils down to the fact that price increases due to the carbon tax will vary depending on where people live.

People in rural Saskatchewan, for example, don't spend their money on the same things as people in downtown Toronto.

And even when it comes to identical products, the price increase as a result of the carbon tax will vary from place to place depending on a variety of factors, including transportation-related costs.

App developed by Robson Fletcher, Nael Shiab, Robert Davidson, CBC News Labs. Design by Wendy Martinez