Ontario income tax is charged on top of federal tax through five provincial brackets running from 5.05% on the first $53,891 of taxable income to 13.16% on income over $220,000, with a surtax layered on higher provincial tax amounts and a separate Ontario Health Premium that can add up to $900 a year. The Canada Revenue Agency collects both federal and Ontario tax on a single return, so the provincial share is often invisible on your paycheque even though it drives a large portion of what you owe.
Who Owes Ontario Income Tax
Under section 2 of Ontario’s Income Tax Act, you owe Ontario tax if you reside in the province on the last day of the taxation year, or if you earned income in Ontario during the year while living elsewhere.1Ontario.ca. Income Tax Act, R.S.O. 1990, c. I.2 The practical date is December 31. If Ontario is your home on that day, your worldwide income for the full year is taxed under Ontario’s rules, no matter where you lived during the earlier months or where the money came from.
Residency itself turns on your significant ties: a home in the province, a spouse or common-law partner here, dependants here. A driver’s licence, a bank account, or local memberships can reinforce the picture but rarely decide it alone.2Canada.ca. Determining Your Residency Status If you moved into Ontario mid-year, the province claims the full return. If you live elsewhere but earned employment or business income in Ontario, you pay Ontario tax only on the Ontario-attributable portion, calculated on Form T2203 rather than the standard Ontario return.3Canada Revenue Agency. Ontario – 2025 Income Tax Package
Ontario Tax Brackets for 2026
Brackets are indexed each year. For 2026 the indexation factor is 1.9%, so every threshold moved up slightly. Each rate applies only to the income that falls inside its range:
- 5.05% on the first $53,891
- 9.15% on income between $53,891 and $107,785
- 11.16% on income between $107,785 and $150,000
- 12.16% on income between $150,000 and $220,000
- 13.16% on income over $220,000
Crossing into a higher bracket does not reprice your earlier income.4Canada Revenue Agency. Payroll Deductions Tables – CPP, EI, and Income Tax Deductions – Ontario Someone with $120,000 of taxable income pays 5.05% on the first $53,891, 9.15% on the next $53,894, and 11.16% only on the $12,215 above $107,785. The blended effective rate sits well below the top bracket the person technically reaches.
The Ontario Surtax
Ontario applies a surtax on top of the regular provincial tax once your basic Ontario tax crosses certain amounts. It is not another bracket on income; it is a percentage charged on the tax figure itself. For 2026 it works in two tiers:
- 20% of basic Ontario tax over $5,818
- An additional 36% of basic Ontario tax over $7,446, stacking on top of the 20% for a combined 56% on that portion
For a filer claiming only the basic personal amount, the 20% surtax starts at roughly $94,907 of taxable income. Because the surtax compounds the base tax, Ontario’s actual top marginal rate on income over $220,000 lands near 20.53% once the surtax is included. That is the gap people miss when they estimate from the five-bracket table alone.
Credits That Reduce Your Ontario Tax
Non-refundable credits lower the tax you owe but can’t produce a refund on their own. Each is calculated at 5.05%, the lowest bracket rate, applied to the eligible amount.
The Basic Personal Amount is the big one. For 2026 it is $12,989, which is the slice of income the province doesn’t tax at all.4Canada Revenue Agency. Payroll Deductions Tables – CPP, EI, and Income Tax Deductions – Ontario Residents 65 or older can claim the Age Amount. The Disability Amount is available with a signed T2201 from a medical practitioner, and post-secondary students can claim tuition using the T2202 from their school.
The LIFT Credit
The Low-income Individuals and Families Tax credit is aimed at lower-earning workers. For 2026, the maximum is $875 for an individual and $1,750 for a couple, equal to 5.05% of employment income up to that cap. It can eliminate your Ontario income tax entirely, though not the health premium. The credit begins to phase out at $32,500 of individual net income or $65,000 of family net income, reduced by 5% of the excess.
Ontario Tax Reduction
The Ontario Tax Reduction is a separate break for very low-income filers. It applies automatically through Form ON428 and can wipe out basic provincial tax when income is low enough, phasing out as income rises. Together with LIFT, it means many modest-earning Ontarians pay little or no provincial income tax beyond the health premium.
The Ontario Health Premium
The province charges a health premium alongside income tax. It kicks in once taxable income passes $20,000 and climbs through six tiers to a maximum of $900 a year:5Government of Ontario. Health Premium
- $20,000 or less: $0
- $20,001 to $36,000: up to $300 (6% of income above $20,000)
- $36,001 to $48,000: up to $450 ($300 plus 6% of income above $36,000)
- $48,001 to $72,000: up to $600 ($450 plus 25% of income above $48,000)
- $72,001 to $200,000: up to $750 ($600 plus 25% of income above $72,000)
- Over $200,000: up to $900 ($750 plus 25% of income above $200,000)
The premium ramps up within each tier rather than snapping to the full tier amount at the threshold. At $25,000 of income, for example, you owe 6% of the $5,000 above $20,000, which comes to $300. The premium is collected through your tax return and can’t be opted out of. It buys no additional coverage beyond standard OHIP.
Refundable Credits That Can Pay You
Refundable credits can produce money even when you owe no tax. The main one is the Ontario Trillium Benefit, which combines three credits into a single payment:6Canada Revenue Agency. Ontario Trillium Benefit Questions and Answers
- The Ontario Energy and Property Tax Credit, which helps offset property tax and energy costs for both renters and homeowners
- The Northern Ontario Energy Credit, an additional amount for residents of Northern Ontario
- The Ontario Sales Tax Credit, with a maximum of $378 per adult and per child for the 2026–27 benefit year7Canada Revenue Agency. Province of Ontario
You qualify for the Trillium Benefit if you’re entitled to any one of the three. The sales tax credit is calculated automatically from your return; for the other two you need to complete Form ON-BEN. Beginning July 2026, if your total Trillium Benefit is $500 or less, it will be paid as a single lump sum rather than monthly.8Government of Ontario. Annex – Details of Tax Measures and Other Legislative Initiatives
Ontario also offers the Senior Homeowners’ Property Tax Grant for residents who were at least 64 years old on December 31 of the previous year. The 2026 maximum is $500, capped at the property tax you actually paid, and it’s claimed through Form ON-BEN.9Canada Revenue Agency. Ontario Senior Homeowners’ Property Tax Grant (OSHPTG) Questions and Answers
How Investment Income Is Taxed
Interest is taxed at your full marginal rate, the same as employment income. Capital gains get preferential treatment: only half of the gain is added to taxable income. A proposed federal change to the inclusion rate was cancelled in March 2025, so the 50% inclusion remains for 2026. A $10,000 realized gain adds $5,000 to your Ontario taxable income and is taxed at whatever bracket that $5,000 falls into.
Canadian dividends go through a gross-up and dividend-tax-credit mechanism. Eligible dividends, generally from large public corporations, carry a more generous credit than non-eligible dividends from smaller private companies. For high-income Ontario residents the combined top marginal rate on eligible dividends is roughly 39%, versus about 48% on non-eligible dividends. If you hold dividend-paying investments outside a registered account, the distinction is worth tracking.
Filing, Deadlines, and Payments
Ontario tax is calculated on Form ON428 and filed with your federal return.10Canada Revenue Agency. 5006-C ON428 – Ontario Tax The deadline for most individuals is April 30. If you or your spouse are self-employed, the filing deadline is June 15, but any balance owing is still due April 30, and interest starts accruing on May 1.11Canada Revenue Agency. Due Dates and Payment Dates – Personal Income Tax
File late with a balance owing and the CRA charges 5% of the balance plus 1% for each full month the return is late, up to 12 months. Repeat late filers see those penalties doubled.12Canada Revenue Agency. Interest and Penalties on Late Taxes Filing on time avoids the late-filing penalty even if you can’t pay in full; a payment arrangement can follow.
Quarterly Installments
If your net tax owing exceeds $3,000 for 2026 and also exceeded $3,000 in either 2025 or 2024, the CRA expects quarterly installments on March 15, June 15, September 15, and December 15.13Canada Revenue Agency. Required Tax Instalments for Individuals This commonly affects the self-employed, landlords, and retirees with significant investment income. The CRA sends reminders with suggested amounts, but paying on time is your responsibility; missed installments trigger interest.
Notices of Assessment and Objections
After your return is processed, the CRA issues a Notice of Assessment. If the figures don’t match what you filed, you have the later of 90 days from the date on the notice or one year after your filing deadline to file a formal objection.14Canada Revenue Agency. Resolving Your Dispute – Objection Rights Under the Income Tax Act For most individuals that works out to April 30 of the second year after the tax year in question.
Keeping Records
Hold on to supporting documents for six years from the end of the tax year they relate to: receipts, T4s, rental records, and anything else backing up the return.15Canada.ca. Where to Keep Your Records, for How Long and How to Request the Permission to Destroy Them Early If you file late, the six-year clock starts from the date you actually file. If you’ve filed an objection or appeal, keep everything until the dispute is resolved. Records tied to property purchases or share registries should be kept indefinitely, because the CRA will want the original cost basis whenever you sell.