Updated Checked by the Tax-Services.ca editorial team How we check
A $40,000 first full-time job in Ontario pays $32,814 a year after tax, CPP and EI, which is $2,734 a month or $1,262 every second Friday. If you start partway through 2026, the tax taken off each cheque is usually more than you will owe for the year. The difference comes back as a refund when you file in spring 2027.
How much do you take home on $40,000 in Ontario?
You take home $32,814 a year, as of October 2026, which is 82% of your gross pay. On a 40-hour week that is $19.23 an hour before deductions and $15.78 an hour after them. The table shows a full year and a single biweekly cheque for a single worker with basic credits and no other income.
| Line (2026, Ontario) | Per year | Per biweekly cheque |
|---|---|---|
| Gross pay | $40,000 | $1,538 |
| Income tax (federal and Ontario) | $4,363 | $168 |
| CPP | $2,172 | $84 |
| EI | $652 | $25 |
| Take-home pay | $32,814 | $1,262 |
Lines can be a dollar off after rounding. Income tax is a small slice at this pay, 10.9% of gross, while CPP and EI together take 7.1%. The next dollar you earn is taxed at 19.05%.
CPP is 5.95% of pay above $3,500, which comes to $2,172 for the year, and EI is 1.63% of all pay, or $652 (CPP rates and EI rates at the Canada Revenue Agency). Both start from your first dollar, so even a short first year has them on the stub.
What is the TD1, and what happens if you skip it?
The TD1 is the form your employer uses to work out how much income tax to take off each cheque, and if you don’t hand one in, the deductions only include the basic personal amount. The Canada Revenue Agency explains this in its guide to filing form TD1. You fill in a federal form, and an Ontario one (TD1ON) if you claim more than the basic amount. Give your employer the forms on your first day, because they decide how big your first cheques are.
If you hold two jobs at once, claim the basic personal amount on only one of the forms. The Canada Revenue Agency: starting work page walks through the other first-job steps, such as getting a social insurance number.
Why do people who start mid-year often get a refund?
Because your employer’s payroll formulas treat each cheque as if you earn that pay for a full year (Canada Revenue Agency: payroll deductions formulas). Someone who starts in September receives the withholding of a $40,000 earner but only earns about a third of it, which is often below the basic personal amount. The table is an estimate that spreads a year’s tax evenly across 26 cheques. Real withholding can differ by a few dollars.
| Biweekly cheques worked in 2026 | Roughly when you start | Gross earned | Tax withheld (estimate) | Tax you owe (estimate) | Refund (estimate) |
|---|---|---|---|---|---|
| 4 | early November | $6,154 | $671 | $0 | $671 |
| 8 | early September | $12,308 | $1,342 | $0 | $1,342 |
| 13 | the start of July | $20,000 | $2,181 | $392 | $1,789 |
| 17 | early May | $26,154 | $2,853 | $1,775 | $1,078 |
Take the September start. You earn $12,308, have about $1,342 withheld, and owe $0 because the income is under the basic personal amount. The refund would be about $1,342. EI is not refunded the same way, so that part of your pay stays with the program.
How should the first cheques be budgeted?
Budget from take-home, not from the $40,000. A 50/30/20 split of $2,734 a month gives $1,367 for needs, $820 for wants and $547 for saving. A year has 26 biweekly cheques, so ten months bring two and two months bring three. Build build the monthly budget on two cheques ($2,524) and treat the third as a bonus for debt, the emergency fund or the TFSA. A rent that eats more than $1,367 of that leaves little room, which is worth knowing before you sign a lease.
When does the refund arrive?
If you file online with direct deposit, the CRA’s service standard is about two weeks, and a paper return can take about eight weeks (Canada Revenue Agency: EFILE for individuals). The 2026 return is due on 30 April 2027. Filing early gets the money back sooner. Our page on when you will get your tax refund covers the timeline in more detail.
What should a first-time earner do with the money?
Start by covering the monthly basics, then pick one account. The TFSA limit for 2026 is $7,000 (Canada Revenue Agency: TFSA contributions), and the first home savings account lets you put in $8,000 a year (Canada Revenue Agency: FHSA). An RRSP deposit saves less tax at $40,000 than later in your career. A $2,000 deposit saves $433 and costs $1,567 of take-home, and a $5,000 deposit saves $1,102 and costs $3,898. Compare the options on the FHSA versus RRSP page.
What could change these numbers?
A second job, a bonus or overtime raises the tax. Tuition you carried forward from school lowers it (see how tuition credits carry forward). Another province changes the provincial line only. Benefits, union dues and a workplace pension all lower the cheque too. For other incomes, try $45,000 in Ontario or the take-home pay calculator, and the first job guide has the rest. The 2027 federal brackets have not been published yet, so these are 2026 figures.
Where does this information come from?
Rules come from the Canada Revenue Agency (TD1 guide, payroll deduction formulas, EFILE, TFSA and FHSA pages); take-home pay and the refund examples are estimates from this site’s 2026 payroll and income-tax engine. Checked in October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the full disclaimer.
Frequently asked questions
How much is $40,000 a year per hour after tax in Ontario?
About $15.78 an hour after tax, CPP and EI, against $19.23 before deductions, on a 40-hour week and 2,080 hours a year. A 37.5-hour week gives a higher hourly figure for the same pay.
What if I forget to give my employer a TD1?
The employer deducts tax using only the basic personal amount. Any other credits you could have listed on the form wait until you file your return, so your cheques may be a little smaller than they need to be.
Will I get a tax refund on my first job?
Often yes, especially if you started late in the year. In the September example above, about $1,342 was withheld that you did not owe. How much you get back depends on your start date, credits and any second income.
How much is $40,000 monthly in Ontario?
$2,734 a month after tax, CPP and EI for 2026. The 50/30/20 split of that figure gives $1,367 for needs, $820 for wants and $547 for saving, which is a reasonable budget starting point.
All payroll and salary calculators
- How Canadian income tax works: brackets and credits
How federal and provincial Canadian income tax stack up, what marginal and average rates mean, and how credits and deductions change your bill
- Ontario income tax and sales tax in 2026
How Ontario income tax works in 2026: the five brackets, the surtax and health premium, the 13% HST, and the calculators that switch to Ontario