- ontario tax brackets 2026
- income tax
- CRA
- canada tax brackets 2026
Ontario Tax Brackets 2026: Complete Guide for Residents
Ontario residents pay two layers of income tax: federal and provincial. Understanding both sets of brackets helps you estimate your actual tax bill, plan RRSP contributions, and identify where a raise or a business income spike pushes you into a higher rate. If you are considering incorporating your business to access the small business rate, bracket planning is the first step. This guide covers the exact 2026 numbers for Ontario residents, including a notable federal rate change and the provincial surtax that most bracket guides skip.
How Canadian Tax Brackets Work
Canada uses a marginal rate system. You don’t pay the top rate on all income - you pay each rate only on the income within that bracket.
For example, if you earn $60,000 in Ontario in 2026, you don’t pay 20.5% federal on the whole amount. You pay 14% on the first $58,523 and 20.5% only on the remaining $1,477.
Each bracket rate applies to the income in that band. Your average (effective) tax rate is almost always lower than your marginal rate.
Federal Tax Brackets Canada 2026
A significant change took effect for 2026: the lowest federal tax rate dropped from 15% to 14%. This was phased in over 2025 (effective rate 14.5%) and is now fully 14% for the 2026 tax year and beyond.
| Taxable Income | Federal Rate |
|---|---|
| $0 to $58,523 | 14% |
| $58,523 to $117,045 | 20.5% |
| $117,045 to $181,440 | 26% |
| $181,440 to $258,482 | 29.29%* |
| Over $258,482 | 33% |
*The 29.29% rate reflects the phase-out of the federal basic personal amount between $181,440 and $258,482 of net income.
The federal basic personal amount (BPA) for 2026 ranges from $14,829 (at the top of the phase-out range) to $16,452 (for lower-income earners). The BPA reduces the amount of federal tax you owe directly.
Source: TaxTips.ca, CRA T4032 Ontario Payroll Deductions Tables 2026.
Ontario Provincial Tax Brackets 2026
Ontario’s 2026 brackets are indexed at 1.9% above 2025 levels, except the $150,000 and $220,000 thresholds, which are not indexed.
| Taxable Income | Ontario Rate |
|---|---|
| $0 to $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% |
The Ontario basic personal amount for 2026 is $12,989.
Combined Federal + Ontario Marginal Tax Rates 2026
This is the number that matters for planning decisions. When someone says “I’m in the 43% bracket,” they mean the combined rate.
| Taxable Income | Combined Marginal Rate |
|---|---|
| Up to $53,891 | 19.05% |
| $53,891 to $58,523 | 23.15% |
| $58,523 to $107,785 | 29.65% |
| $107,785 to $117,045 | 31.66% |
| $117,045 to $150,000 | 37.16% |
| $150,000 to $181,440 | 38.16% |
| $181,440 to $220,000 | 41.45% |
| $220,000 to $258,482 | 42.45% |
| Over $258,482 | 53.53%* |
*The 53.53% top rate includes the Ontario surtax. Without the surtax, the top combined statutory rate is 46.16%.
Note: these rates apply to employment income, business income, and interest income. Capital gains have lower effective rates (50% inclusion for amounts up to $250,000 annually; 66.67% for gains above that threshold). Eligible Canadian dividends use a gross-up and dividend tax credit mechanism.
Source: TaxTips.ca, 2026 Combined Federal and Ontario Tax Rates.
Ontario Surtax 2026
Ontario applies a surtax on top of basic Ontario tax when provincial tax exceeds certain thresholds. For 2026:
- 20% surtax on Ontario tax over $5,818
- An additional 36% surtax on Ontario tax over a higher threshold
The surtax is why the top combined rate reaches 53.53% rather than stopping at 46.16% (the sum of the top statutory rates). For most earners under $90,000, the surtax does not apply.
Key Ontario Tax Credits for 2026
Ontario Basic Personal Amount: At 5.05% applied to $12,989, this reduces your Ontario tax by approximately $656.
Ontario Trillium Benefit (OTB): Combines the Ontario Energy and Property Tax Credit, Northern Ontario Energy Credit, and Ontario Sales Tax Credit into one monthly payment. Low-to-moderate income earners in Toronto qualify based on rent paid, property taxes, and household income.
Ontario Senior Homeowners’ Property Tax Grant: Up to $500 for qualifying seniors. Apply on your T1 personal tax return.
Disability Tax Credit (DTC): A federal credit that reduces federal taxes. Ontario mirrors it at the provincial rate.
The 14% Federal Rate Change: Who Benefits?
The drop from 15% to 14% on the first bracket saves everyone who pays federal tax. For income up to $58,523, the saving is 1% of that amount - up to $585/year for someone at the top of the first bracket.
For a median Toronto household earning $80,000, the saving is roughly 1% x $58,523 = $585 in federal tax. Not dramatic, but real.
The change also lowers the combined rate in the bottom bracket from 20.05% (2025) to 19.05% (2026) for Ontario residents.
RRSP Planning With 2026 Brackets
The most direct way to reduce your marginal rate is RRSP contributions. Every dollar contributed reduces taxable income by one dollar, saving at your marginal combined rate.
If your income sits at $130,000 (combined rate 37.16%), an RRSP contribution of $10,000 saves approximately $3,716 in combined taxes this year.
The 2025 RRSP contribution limit is $32,490 (based on 18% of 2024 earned income). Your deadline to contribute for the 2025 tax year was March 2, 2026. For the 2026 tax year, contributions made by March 1, 2027 count. Check your Notice of Assessment for your exact unused room.
Need Help Reducing Your Ontario Tax Bill? Get a Free Quote from a Toronto Accountant.
Tax bracket planning - RRSP timing, income splitting, capital gains management - can save thousands annually. Our Toronto accounting team works with individuals and business owners across Ontario to minimize CRA obligations legally and permanently.
Get a free quote today and find out what you’re leaving on the table.