Lisa MacColl is a writer, investor and former compliance consultant in the group retirement and individual wealth management fields. Lisa has written about personal finance for 14 years and currently writes about investing and investment providers for Wealthsimple. Lisa's past work has been published in Canadian Money Saver, Advisor’s Edge, CBC, and CreditCards.ca. She was a nominee for the 2015 Oktoberfest Women of the Year, Professional Category. Lisa holds an M.A. and B.A. from the Wilfrid Laurier University.
Canada uses a progressive tax system, which means someone’s tax rate increases the more money they make (this seems fair, unless you ask a billionaire). The progressive tax system is true for both federal and provincial/territorial taxes, which each have their own unique tax brackets, just to keep you on your toes. Income tax in Canada is based on your taxable income, which is your total gross income from all sources, minus eligible deductions.
Provincial/territorial taxes are based on your province or territory of residence as of December 31. For example, if you’re filing 2023 taxes and you lived in Alberta to start the year before moving to Ontario in October, you’ll be subject to Ontario income tax (in addition to federal taxes everyone in Canada pays).
What are Ontario's 2024 tax brackets and rates?
| 2024 Ontario income tax brackets | 2024 Ontario income tax rate |
|---|---|
| first $51,446 | 5.05% |
| over $51,446 up to $102,894 | 9.15% |
| over $102,894 up to $150,000 | 11.16% |
| over $150,000 up to $220,000 | 12.16% |
| over $220,000 | 13.16% |
What are Canada's Federal 2024 tax brackets and rates?
The following are the federal tax rates for tax year 2024 according to the Canada Revenue Agency (CRA):
| 2024 federal income tax brackets | 2024 federal income tax rates |
|---|---|
| $55,867 or less | 15% |
| $55,867.01 to $111,733 | 20.5% |
| $111,733 to $173,205 | 26% |
| $173,205.01 to $246,752 | 29% |
| More than $246,752 | 33% |
How do I calculate income tax in Ontario?
It just takes some simple math to calculate your marginal tax rate (the total amount of federal and provincial/territorial taxes you owe), so stay with us. For example, if your taxable income after deductions and exemptions was $45,000, you owe 15% of that for your federal tax, and the Ontario provincial amount you owe is 5.05%, then your marginal tax rate (15% + 5.05%) is 20.05%.
If you want to get a rough estimate of how much income tax you owe on your taxable income, first calculate your federal income tax, then calculate your provincial tax, and, finally, add the amounts together.
To follow the example where your taxable income was $45,000 and you didn’t have any deductions or credits, your calculation would be:
$45,000 x 15% = $6,750 (federal taxes)
$45,000 x 5.05% = $2,272.50 (Ontario taxes)
Total income tax on taxable income: $6,750 + $2,272.50 = $9,022.50 total combined federal and provincial taxes
One confusing detail to note: In a progressive tax system, your income tax payable is cumulative. That means that depending on what tax bracket your taxable income falls in, you could be paying multiple rates of tax.
To see this in action, let’s say you have a taxable income of $60,000. Here’s how you would figure out your taxes:
Calculating the federal tax bill Based on the updated 2024 federal tax rates, the first $55,867 of your income is taxed at 15%, which works out to $8,380.05. Taking your total income ($60,000) and subtracting the first income tax bracket ($55,867), you have $4,133 of unaccounted-for income remaining. That amount will be taxed at a higher rate of 20.5%, which is $847.27. This means the total you owe in federal tax is $8,380.05 + $847.27, so $9,227.32.
Calculating the total tax bill To get the marginal tax, the combined federal and provincial taxes you owe, add what you owe federally ($9,227.32) and what you owe to Ontario ($3,471.53), for a total of $12,698.85.
What a deal for getting to live in this beautiful, freezing place!
How can I reduce my income tax in Ontario?
Check out these ways to cut down on how much tax you’ll owe as an Ontario resident through deductions or credits (note: asking nicely to pay less doesn’t work; we’ve tried).
Tax credits
Finally, a word we love to hear whether we’re spending on trousers or taxes: discounts! The most common federal nonrefundable tax credits are things like the basic personal amount, medical expenses, and charitable or political donations.
Most taxpayers in Canada are eligible to claim the federal basic personal amount of $15,705 on their 2024 taxes, which reduces taxable income, if their net income is $173,205 or less. (If your net income is $246,752 or more, that personal amount is reduced to $14,156.) In Ontario, you are also eligible to claim the basic personal amount of $12,399. There are additional credits for seniors, for people who have a qualifying disability, or for those caring for a person with a disability.
Also, if your income is less than $15,705 for 2024, you shouldn’t have to pay any income tax. You should still file your taxes, though. All kinds of federal and provincial/territorial programs, such as the GST/HST credit, are based on your income as reported on your income tax return.
Nonrefundable tax credits reduce the amount of tax you have to pay, but you are only eligible to claim them if you owe taxes. In other words, you need to have earned some kind of income. For nonrefundable tax credits, you can claim only as much as would reduce your taxes to zero, but you don’t get the excess as a refund.
So, if you owe $4,000 in taxes, and you have $4,500 in nonrefundable tax credits, you can claim $4,000, but you don’t get $500 as a refund. In some circumstances, unused credits such as tax credits for tuition, your student loan interest, and donations can be carried forward for future years.
In Ontario, in addition to the federal credits, you can claim any unused tuition credits at a post-secondary education institution, interest on student loans, a tax credit if you have kids, and expenses when adopting a child.
There are also refundable tax credits that every eligible person can claim, whether or not they have income or owe taxes. So, if you owe $4,000 in taxes, and you have $4,500 in refundable tax credits, the first $4,000 would be used to reduce your tax to zero. The outstanding $500 would be added to your tax refund. There are refundable tax credits for residents of Ontario, including the Ontario Child Care Tax Credit, the Ontario Seniors’ Public Transit Tax Credit, and tax credits for political contributions.
This isn’t a comprehensive list, though. To check if there are other tax credits you may be eligible for, have a look here or call the CRA at 800-959-8281.
Deductions
A deduction reduces your taxable income, lowering the amount of income you will be taxed on. The CRA provides detailed information on both federal and province-/territory-specific deductions. Deductions exist for Canadian Armed Forces personnel and police members, Registered Pension Plan holders, Registered Retirement Savings Plan contributors, and more. There may be others that you qualify for. Check this list or call the CRA at 1-800-959-8281.
Frequently asked questions
In Ontario, tax brackets are based on net income for income tax purposes. There are five tax brackets:
- First: $51,446 or less
- Second: over $51,446 up to $102,894
- Third: over $102,894 up to $150,000
- Fourth: over $150,000 up to $220,000
- Fifth: over $220,000
Each tax bracket has a different rate of tax associated with it. If your net income falls in the second bracket, you will be taxed on the rate for the first $51,446 and the second bracket for the balance.
Yes, the rate of tax increases as the amount of income increases.
If you calculate your net income after deductions and compare it to the chart above, you will know how much tax you will need to pay. Find the tax bracket where your income falls. If your income falls in the first tax bracket, you will only be taxed on that tax rate.
If your income falls in a higher tax bracket, you will be taxed on the lowest tax bracket rate to the maximum for that bracket, on the second tax bracket to the maximum amount for that bracket, and so on progressively until you reach the bracket your income belongs in. Remember that there are different rates for federal and provincial/territorial taxes.
Any changes to tax rates or income brackets must be announced in a budget. Both federal and provincial/territorial governments can make changes to their level of taxation, tax deductions or credits, programs, and exemptions, but they are always done in a budget announcement. They aren’t enacted until the budget bill receives Royal Assent.
All income tax owing has historically been due April 30 in the calendar year following the tax year you are filing. If the date falls on a Saturday or Sunday, your return will be considered filed on time if the Canada Revenue Agency receives it, or even if it is postmarked, on or before the next business day.
If you or your spouse or common-law partner are self-employed, you have until June 15 to file on time. Again if this date falls on a weekend, the deadline moves to the next business day.
That said, waiting until the last minute makes a downer (paying taxes) even worse (rushing to pay taxes), so we recommend you file your return long before the deadline. Bonus: that means you’ll also receive any refund you’re entitled to sooner.
Last Updated November 24, 2023
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