At MIMAKALI, we often get questions like:
“If my spouse and I earn the same total household income, do we pay the same taxes as another couple?”
The answer: Not necessarily.
The way income is split between spouses can have a big impact on total taxes, childcare deductions, and RRSP contribution room. Let’s break it down with an example.
Scenario
We’ll compare two households with the same total family income: $200,000/year.
- Dual-Income Household
- Partner A: $100,000
- Partner B: $100,000
- Single-Income Household
- Partner A: $200,000
- Partner B: $0 (stay-at-home)
Assumptions:
- Ontario residents
- No other deductions except child care
- One child in full-time daycare costing $15,000/year
- 2025 federal & Ontario tax brackets
- Standard personal tax credits claimed
Total Taxes Owed
| Household Type | Partner A Taxes | Partner B Taxes | Total Family Taxes |
| Dual-Income | ~$23,900 | ~$23,900 | ~$47,800 |
| Single-Income | ~$59,500 | $0 | ~$59,500 |
✅ Difference: The single-income household pays about $11,700 more in income tax every year — simply because more income is taxed in the higher brackets.
Child Care Deductions
In Canada, child care expenses must be claimed by the lower-income spouse (unless they are in school, disabled, or other exceptions apply).
- Dual-Income Household: Partner B earns $100,000 and can deduct the $15,000 daycare cost. This deduction reduces taxable income, saving about $6,000 in taxes.
- Single-Income Household: Partner B earns $0 and is the lower-income spouse — but they cannot claim daycare costs if they aren’t working. Since they are home, there’s usually no eligible deduction (and likely no daycare expenses anyway).
RRSP Contribution Room
RRSP contribution room is 18% of your earned income (up to the annual limit).
- Dual-Income Household:
- Partner A: 18% × $100,000 = $18,000
- Partner B: 18% × $100,000 = $18,000
- Total family RRSP room: $36,000/year
- Single-Income Household:
- Partner A: 18% × $200,000 = $36,000
- Partner B: $0 earned income → $0 RRSP room
- Total family RRSP room: $36,000/year
While both families have the same combined RRSP room, the dual-income couple can split the savings and potentially reduce taxes faster by contributing in both names.
Other Considerations
- CPP & EI Contributions:
Dual-income couples each contribute up to the maximum CPP and EI amounts, which means they pay more total contributions but also get more in retirement benefits from CPP later. - Old Age Security (OAS) Clawback:
A single-income household with one high earner is more likely to hit the OAS clawback threshold in retirement because that income is concentrated in one person’s name. - Pension Splitting in Retirement:
Even if you were a single-income household while working, you can split up to 50% of eligible pension income in retirement, which can help reduce taxes later.
Key Takeaways
- Dual incomes are generally taxed less when household income is equal, thanks to lower marginal rates on each person’s earnings.
- Child care deductions can be valuable for dual-income households but are usually unavailable if one spouse stays home.
- RRSP room totals may be the same, but splitting contributions can improve tax efficiency.
- Structuring your family income can have long-term impacts on taxes, retirement benefits, and eligibility for credits.
Need Advice on Your Family’s Tax Strategy?
At MIMAKALI, we help families navigate Canada’s complex tax system — from optimizing deductions to planning RRSP and TFSA contributions. Whether you’re a single- or dual-income household, smart planning can save thousands over time.
📞 Contact us today to make your money work smarter for your family.