Ontario Tax Rates: Brackets, Surtax, and Health Premium

Ontario tax rates combine a federal layer and a provincial layer that the Canada Revenue Agency collects together on one return. For 2026, the combined marginal rate on ordinary income starts at roughly 19.05% and reaches 53.53% on income above $258,482.¹ Your province of residence on December 31 determines which provincial rates apply to your entire year’s income.² On top of income tax, Ontario adds a surtax for higher earners, a mandatory health premium, and a 13% harmonized sales tax on most purchases.

Ontario Provincial Brackets for 2026

Ontario’s Income Tax Act divides taxable income into five progressive brackets.³ Each rate applies only to the dollars falling within that range, not to your total income:

First $53,891: 5.05%
$53,891 to $107,785: 9.15%
$107,785 to $150,000: 11.16%
$150,000 to $220,000: 12.16%
Over $220,000: 13.16%

These thresholds are indexed to inflation each year under the Act’s annual adjustment provisions.³ Marginal rates work as a stack. If you earn $80,000, you pay 5.05% on the first $53,891 and 9.15% only on the remaining $26,109. Your effective provincial rate on $80,000 works out to about 6.20%, well below the 9.15% bracket you technically fall into.

Federal Brackets for 2026

The federal government reduced its lowest marginal rate from 15% to 14% for 2026 through Bill C-4.⁴ The five federal brackets for 2026 are:

First $58,523: 14%
$58,523 to $117,045: 20.5%
$117,045 to $181,440: 26%
$181,440 to $258,482: 29%
Over $258,482: 33%

Federal thresholds are also indexed to inflation. The one-percentage-point drop in the lowest bracket saves up to about $585 in federal tax compared to 2025 for anyone earning above the first bracket ceiling.

How the Two Systems Combine

You calculate two separate tax amounts on one return. When you layer the provincial and federal rates, the combined marginal rate starts at roughly 19.05% (14% federal plus 5.05% provincial) on the first dollars of taxable income and climbs to 53.53% on every dollar above $258,482.¹

The bracket thresholds in the two systems don’t line up. You can move into a higher federal bracket while remaining in the same provincial tier, or the reverse. Each mismatch creates a new combined marginal rate as one system or the other hits a threshold, which is why the climb between 19.05% and 53.53% happens in uneven steps rather than smoothly.

The Ontario Surtax

Higher-income earners face a provincial surtax that stacks on top of basic Ontario tax. For 2026, a 20% surtax applies once your basic Ontario tax exceeds $5,818, and an additional 36% surtax applies when it exceeds $7,446.⁵ The two layers stack, so if your provincial tax is high enough you pay both.

For someone claiming only the basic personal amount, the 20% surtax starts hitting around $94,900 in taxable income, and the 36% surtax around $111,800. The surtax is built into the combined marginal rates already quoted; it does not appear as a separate line on your return.

Ontario Health Premium

The Ontario Health Premium is a separate mandatory charge that funds the provincial healthcare system. It uses a tiered fee structure rather than a percentage rate. If your taxable income is $20,000 or less, you owe nothing.⁶ Above that, the premium rises in steps:

$20,001 to $36,000: 6% of income above $20,000, up to $300
$36,001 to $48,000: $300 plus 6% of income above $36,000, up to $450
$48,001 to $72,000: $450 plus 25% of income above $48,000, up to $600
$72,001 to $200,000: $600 plus 25% of income above $72,000, up to $750
Over $200,000: $750 plus 25% of income above $200,000, up to $900

The maximum premium is $900 per year, regardless of how high your income goes.⁵ It’s calculated automatically when you file. Unlike CPP or EI, your employer does not withhold it from your paycheque, so the full amount lands as a lump obligation at tax time.

Rates on Investment Income

Not every dollar of income faces the same combined rate. The type of income changes how much of it actually shows up on your return.

Capital gains are taxed at a 50% inclusion rate for 2026. A proposed increase to two-thirds was cancelled by the federal government before it took effect. If you sell an investment for a $10,000 profit, only $5,000 is added to taxable income and taxed at your marginal rate. At the top combined bracket, the effective tax on capital gains works out to about 26.76%.

Dividends from Canadian corporations get a different treatment. Eligible dividends, paid by large public companies from income taxed at the full corporate rate, are grossed up and then offset by federal and provincial dividend tax credits. The top combined rate on eligible dividends is roughly 39.34% for 2026. Non-eligible dividends, paid from small business income, face a top combined rate of about 47.74%.¹ Interest income gets no special treatment and is taxed at your full marginal rate.

The Basic Personal Amount

Before any of the rates above bite, both governments shelter a baseline of income through the Basic Personal Amount. For 2026, the federal amount is $16,452 for most taxpayers, dropping to $14,829 for those with net income above the top bracket threshold. Ontario’s provincial amount is $12,989.⁵

These are non-refundable credits, not deductions. Each is multiplied by the lowest applicable tax rate (14% federally, 5.05% provincially) to determine the actual reduction in tax owing. Other non-refundable credits cover age (65 and older), disability, tuition, medical expenses, and charitable donations, and they work the same way: they cut the tax bill dollar for dollar, but cannot on their own generate a refund.

Harmonized Sales Tax

On the consumption side, Ontario’s Harmonized Sales Tax charges 13% on most goods and services at the point of sale, combining a 5% federal portion and an 8% provincial portion.⁷ Basic groceries, prescription drugs, and certain medical devices are either zero-rated (taxed at 0%) or fully exempt. Zero-rated goods still let businesses claim input tax credits on their costs; exempt supplies do not.

For new home purchases, a temporary HST rebate applies to agreements signed between April 1, 2026, and March 31, 2027. Homes priced up to $1 million qualify for a full rebate of the 13% HST, and homes between $1 million and $1.5 million receive a flat $130,000 rebate. For agreements signed before April 1, 2026, the existing rebate caps at $6,300 federally and $24,000 provincially.

1
Ernst & Young. Combined Federal and Provincial Personal Income Tax Rates – 2026
2
Canada Revenue Agency. Your Province or Territory of Residence
3
Ontario.ca. Income Tax Act, R.S.O. 1990, c. I.2
4
Parliamentary Budget Officer. Reducing the Lowest Federal Personal Income Tax Rate to 14 Per Cent
5
Canada Revenue Agency. Payroll Deductions Tables – CPP, EI, and Income Tax Deductions – Ontario
6
Government of Ontario. Health Premium
7
Canada Revenue Agency. Charge and Collect the GST/HST