2023 Ontario Income Tax Calculator
Plug in a few numbers and we’ll give you visibility into your tax bracket, marginal tax rate, average tax rate, and payroll tax deductions, along with an estimate of your tax refunds and taxes owed in 2023.
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Ontario Provincial and Federal tax brackets
Your taxable income places you in the following tax brackets.
| Canadian federal tax bracket | Canadian federal tax rate |
|---|---|
| $53,359 or less | 15.00% |
| $53,359 - $106,717 | 20.50% |
| $106,717 - $165,430 | 26.00% |
| $165,430 - $235,675 | 29.00% |
| More than $235,675 | 33.00% |
| Ontario tax bracket | Ontario tax rate |
|---|---|
| first $49,231 | 5.05% |
| over $49,231 up to $98,463 | 9.15% |
| over $98,463 up to $150,000 | 11.16% |
| over $150,000 up to $220,000 | 12.16% |
| over $220,000 | 13.16% |
Net income is total earnings, minus all deductions and allowances claimed by individual taxpayers. To calculate your Ontario net salary, use an Ontario tax calculator of your choice. This is an easy tool to use to calculate your net salary. You’ll enter your gross per year salary.
Here is a step-by-step process to calculate your Ontario net income: Determine your taxable income by deducting any pre-tax contributions to benefits. To calculate your Ontario net income, you will need to know your gross yearly salary. You can use an Ontario salary calculator of your choice to do this. Make sure that you deduct any pre-tax contributions to benefits from your gross yearly. The pre-tax deductions will reduce your taxable income.
Withhold all applicable taxes (federal and provincial) Go to your source of pay (employment or self-employed) and request the tax slips relevant to your gross yearly salary. Using the payroll stubs, deduct all applicable taxes (federal and provincial) to get your net income.
Deduct any post-tax contributions to benefits If you want to deduct RRSP contributions, deduct the amount you’re planning on deducting from your net income to get your taxable income.
Garnish earnings, if necessary If an employer makes a garnishment of any kind on your pay, it will be necessary to include this amount as taxable salary. This is done to avoid tax evasion and overestimation of the benefits that you might get from such as child support payments and spousal support.
The result is net income After following these steps, you will be left with your net income, also known as your take home income.
Employment income
Self-employment income
Self-employment income
If you are self-employed, an Ontario tax calculator will allow you to enter all your earnings from business, professional fees, and commission for a given year. To do this accurately, make sure that you have not included these amounts in any of your previous years' taxes. Self-employment salary is earnings that you get from your business, professional practice, or commission.
RRSP deduction
RRSP deduction
RRSP deduction is the amount you can deduct from your income account for the year. You’re not mandated to contribute your maximum amount, but if you need to benefit from the highest tax break, the maximum contribution will be for your best interest.
Other incomes to understand in Ontario
What is interest income?
What is interest income?
An example of this would be the earnings you gain from savings or checking accounts that you might have. It also includes life insurance proceeds and annuity payments as well as earnings from foreign sources.
Non-eligible Dividends
Non-eligible Dividends
These are dividends paid out by companies to their shareholders, usually in the form of cash. These are liable for taxation and need to be included in your return.
What are Eligible dividends?
What are Eligible dividends?
These dividends are paid out by companies in Canada to shareholders. You should keep in mind that any capital gains or losses on such dividends should be reported separately from your other types of payment and expenditures.
Other income
Other income
There are a host of other earnings you need to understand before filing your taxes. These can include spousal support, awards, and scholarships. Make sure that you have included any income that may apply.
Understanding Ontario deductions & credits
Ontario Tax deductions
Ontario Tax deductions
Tax deductions refer to government benefits you can use to reduce your total income. These need to be included in the calculations while filing your taxes and reduce your final tax liability.
Some of the common tax deductions in Ontario include:
Mortgage interest
Mortgage interest
In Canada you can generally only deduct mortgage interest when the money is borrowed to buy or improve rental property.
Charitable donations
Charitable donations
Charitable donations can easily reduce your taxable remuneration. These include the following:
- Donations to registered charities
- Donations that are made under a will
- Donations to registered charities
Student loan interest
Student loan interest
Student loan interest is a credit that can reduce your tax liability. The CRA allows you to deduct the interest on student loans.
Child & dependent care expense
Child & dependent care expense
This is another form of deduction that you can avail of if you have children or dependants. If you pay child care for your dependants under the age of 13 then you qualify for a tax credit.
College Education Expense
College Education Expense
Tuition fees for college or university, including textbooks are non-refundable tax credits. These credits were eliminated after 2016. If you did not include them on prior years’ returns, you can ReFile your return to claim them. They can reduce your taxable income. If you attended post-secondary school after 2016, you won't be eligible for the credit in Ontario.
Mental health credits
Mental health credits
The government has various programs in place to ensure that everyone gets adequate mental health treatment. You can claim mental health treatments such as personalized therapy or visits with an occupational therapist. You can earn tax credits from the cost of these treatments.
Other deductibles
Other deductibles
There are a host of other deductions that you can take advantage of if certain criteria are met. These can include:
- Moving expenses
- Interest paid on your student loans
- Disability amount (for self)/Disability amount transferred from a dependant
Most of these exemptions need to be declared as such and should not be included as part of your total salary.
Explore other provincial or territorial tax calculators
FAQs
The filing deadline for an Ontario tax return is April 30 and June 15 for those who are self-employed. Your return can be filed after that as well, however, you’ll be charged interest on any taxes owing and will also pay late filing penalty.
The tax rates for Ontario in 2022 are as follows
- Amounts earned up to $49,231 are taxed at 5.05%.
- Amounts above $49,231 up to $98,463 are taxed at 9.15%.
- Amounts $98,463 up to $150,000, the rate is 11.16%.
- Earnings $150,000 up to $220,000 the rates are 12.16%.
- Finally, earnings above $220,000 will be taxed at a rate of 13.16%.
The tax calculation in Ontario is simple. All you have to do is take your total earnings, add the exempted amounts and then deduct the tax deductions and credits that you are eligible for. Once all these steps are followed, you can find out exactly how much tax you need to pay.
Taxes are deducted from your pay every time. Your employer will calculate how much income tax they will deduct by checking your claim amount on the TD1 form you submitted.
The administration of Ontario has imposed a carbon tax on all energy suppliers. This is done to reduce the number of carbon emissions being released by these companies. This tax is added every time you get a bill for your energy consumption, so it can be quite high depending upon how much you use.
You should keep your tax records for a minimum of six years after filing the return. This is because some questions might arise about it, and you would need to have substantiated that information.
To calculate your gross yearly salary (your total earnings over the course of a year) and subtract your taxes owed which depends on the tax bracket that you fall into.
You can mail your tax return directly to your CRA tax center, which can be Sudbury or Winnipeg depending on where you live in Ontario. If you are filing electronically, there is no need to send any physical documentation of it.
Just like earned income, capital gains have a rate at which they are taxed. Depending on the amount of gains you have, you will be taxed accordingly. It’s important to note that typically, capital gains are only calculated at 50%. If you use a tax filing software, this should be calculated for you automatically.
Refers to the amount deducted from your salary at the source and remitted to the taxation authorities. This is done at a predetermined rate depending upon the payer and the type of payment involved. It is usually non-refundable, but there might be certain cases where you can claim it as a tax refund.
The marginal tax rate is the amount of provincial taxes and fees that you need to pay with regard to your salary in Ontario.
The tax rates for Ontario in 2022 are as follows: amounts earned up to $49,231 are taxed at 5.05%. Amounts above $49,231 up to $98,463 are taxed at 9.15%. For amounts $98,463 up to $150,000, the rate is 11.16%. Earnings $150,000 up to $220,000 the rates are 12.16%. Finally, earnings above $220,000 will be taxed at a rate of 13.16%.
The federal government has a principal residence exemption. This means that if you sell your house, you do not have to pay tax from any gain you get from the sale of your house. This only applies if the property was your principal residence for all the years you owned it. In Ontario, there is the Land Transfer Tax, but this is not related to your yearly return.
Tax credits are amounts that you can claim back from the provincial government to reduce the amount of tax you have to pay. You need to subtract your tax credits directly from the amount of tax payable. The credits are usually non-refundable, but there are certain cases where they can create a refund.
A tax on split income (TOSI) applies to children born in 2003 or later, as well as to amounts received by adult individuals from an affiliate. In cases where TOSI applies, the disability tax credit, the dividend tax credit, and the nonresident tax credit may be used to reduce the tax payable for the year. Form T1206 (Tax on Split Income) can be used to obtain more information.
RRSP stands for Registered Retirement Savings Plan, a type of savings account that allows you to set money aside for retirement. You can save up a significant amount through your RRSP contribution. It all depends on your tax bracket.