Marginal Tax Rates in Canada 2026: Ontario and Every Province

Ontario marginal tax rates 2026

The bands below combine the federal and Ontario bracket thresholds. "Bracket rate" adds the two bracket rates. "Effective rate" is what our engine calculates at a sample income in the band, with the basic personal amount, Ontario surtax, Ontario tax reduction and Health Premium included. Ontario's surtax starts once basic Ontario tax goes above $5,818, at roughly $95,000 of taxable income, so from there the effective rate is higher than the bracket rate.

Why Ontario rates are higher than the brackets suggest

Three Ontario items change the marginal rate, according to the CRA's T4127 formulas. The surtax adds 20% of basic Ontario tax above $5,818 and a further 36% above $7,446. At the top that turns the 13.16% bracket into about 20.53% of each extra dollar. The Ontario Health Premium rises in steps between $20,000 and about $200,600 of taxable income, so for short stretches the marginal rate jumps by 6 or 25 points. The Ontario tax reduction is withdrawn as basic tax rises, which creates high marginal rates at low incomes: at $22,000 our engine shows 30.1%.

Federally, the basic personal amount shrinks from $16,452 to $14,829 between $181,440 and $258,482. That adds about 0.29% to the federal marginal rate in that range. Our figures do not include Ontario's LIFT credit, which is claimed on the return and lowers tax for some low-income workers. They also exclude CPP and EI, which add 5.95% and 1.63% on employment income below the contribution ceilings.

Marginal vs average tax rate: a worked example

Take an Ontario resident with $85,000 of taxable income in 2026. Federal and Ontario income tax is $16,980, an average rate of 20.0%. A $10,000 raise increases income tax by $2,967, so 29.7% of the raise goes to tax and the average rate rises only slightly. Moving into a higher bracket never reduces your take-home pay, because the higher rate applies only to the dollars above the threshold.

Use the marginal rate to estimate the value of a deduction, such as an RRSP contribution, union dues or home office expenses, and the tax on extra income such as a bonus, overtime or a side job. Use the average rate to compare your overall tax burden with someone else's.

How to find your own marginal tax rate

You can work out your marginal rate in four steps. Our income tax calculators do the same thing automatically for your province.

Example: an Ontario employee at $112,000 who makes a $10,000 RRSP contribution saves about $3,222. The first part of the deduction is at the 33.9% rate, and the rest falls back below $107,785 where the rate is 31.5%. The same $10,000 at $85,000 saves about $2,965, because the whole deduction is at 29.6%.

• Start with taxable income: line 26000 of last year's return, or your salary minus RRSP and other deductions.
• Find the federal bracket rate for that income (14.0%, 20.5%, 26.0%, 29.0%, 33.0%).
• Add your province's bracket rate at the same income, then any provincial surtax or premium.
• If a deduction or extra income would cross a threshold, split it: each part is taxed at the rate for its band.

Top combined marginal rates by province

The top federal rate of 33% starts at $258,482. Add the top provincial rate and any surtax for the combined top rate on ordinary income such as salary, interest and RRSP withdrawals. Quebec residents also get a 16.5% reduction of basic federal tax, which lowers the federal part.

Capital gains and other income types

Capital gains are included in income at 50%, so the marginal rate on a capital gain is half the ordinary rate. In Ontario at $85,000 that is 14.8% instead of 29.6%. Eligible and non-eligible Canadian dividends have their own effective rates because of the gross-up and dividend tax credit. Interest, rental income, RRSP and RRIF withdrawals and most pension income are taxed at the full ordinary rate.

Your marginal rate also affects benefits that are reduced as income rises: the Canada child benefit, the Canada Groceries and Essentials Benefit and, for seniors, the OAS recovery tax. A family with one child loses 7% of each extra dollar of family net income above $38,237 in CCB, and a family with four or more children loses 23%, on top of income tax. Above $95,323 of net income, a senior also repays 15% of OAS for each extra dollar.