Updated Checked by the Tax-Services.ca editorial team How we check
Calculating income tax in Ontario takes five steps: work out taxable income, apply the federal brackets, apply the Ontario brackets, subtract your credits and add the Ontario health premium. On an $85,000 salary in 2026, that comes to $10,226.60 federal and $5,324.46 Ontario, or $15,551.05 in all.
What are the 2026 tax brackets in Ontario?
You pay two sets of brackets on the same income, one federal and one provincial. Each rate applies only to the slice of taxable income inside its band, so earning more never makes the money you already earned get taxed at a higher rate.
| Taxable income | Federal rate | Ontario rate |
|---|---|---|
| Up to $53,891 | 14% | 5.05% |
| $53,891 to $58,523 | 14% | 9.15% |
| $58,523 to $107,785 | 20.5% | 9.15% |
| $107,785 to $117,045 | 20.5% | 11.16% |
| $117,045 to $150,000 | 26% | 11.16% |
| $150,000 to $181,440 | 26% | 12.16% |
| $181,440 to $220,000 | 29% | 12.16% |
| $220,000 to $258,482 | 29% | 13.16% |
| Over $258,482 | 33% | 13.16% |
The basic personal amounts are $16,452 federally at most incomes and $12,989 for Ontario. That is the income each system treats as tax free.
How do you get from salary to taxable income?
Start with total income. For an employee that’s mostly your T4 pay. Take off deductions such as an RRSP contribution, child care costs and union dues. A slice of your CPP and the second-tier CPP are deductions too.
On $85,000 the CPP contributions are $4,230.45 plus $416 for the second tier. Of the first amount, $711 is the slice that counts as a deduction. So $1,127 comes off, and taxable income is $83,873.
A worked example on $85,000
Federal first. The engine applies 14%, then 20.5% above $58,523. Credits reduce the result, which here means the base CPP of $3,519.45, EI of $1,123.07 and the Canada employment amount of $1,501, each valued at the lowest rate. That leaves $10,226.60.
Ontario next. The same idea gives $4,574.46 after credits. The surtax doesn’t apply here, because it only starts once Ontario’s basic tax passes $5,818, and we’re at $4,574.46. Then comes the health premium. At this income it’s $750. So Ontario tax is $5,324.46.
Add both and it’s $15,551.05. CPP and EI cost another $5,769.52. What’s left is $63,679.43 from an $85,000 salary. Try your own pay in the income tax calculator, or use the take-home pay calculator to see it per pay period.
Put another way, the income tax is about 18.3% of the gross salary, even though the next dollar of Ontario income at that level is taxed at 29.65% (20.5% federal plus 9.15% provincial). Those two numbers are easy to mix up. The first is your average rate, the second is your marginal rate. It’s a handy ballpark: Sam in Ottawa on $85,000 doesn’t lose three dollars in ten of everything he earns.
What else adds to or lowers the bill?
Two Ontario extras catch people out, and neither shows up on a federal-only estimate. The health premium climbs in steps with income and tops out at $750 for taxable income between $72,000 and $200,000, then rises to $900 once taxable income passes $200,600, according to Ontario’s health premium page. The surtax adds 20% on Ontario tax over $5,818 and a further 36% over $7,446, which is why higher earners see a marginal rate that looks too high.
The Ontario LIFT credit, worth up to $875 for lower earners, exists, but our engine doesn’t model it. If your income is under about $50,000, your actual tax could be a bit lower than our tool shows.
For a range of pay levels, here are the engine’s totals for an employee in Ontario, before CPP and EI:
| Salary | Federal tax | Ontario tax | Total |
|---|---|---|---|
| $50,000 | $3,985.14 | $2,288.18 | $6,273.31 |
| $70,000 | $7,278.19 | $3,855.73 | $11,133.91 |
| $120,000 | $17,502.14 | $9,385.57 | $26,887.71 |
Where does it go wrong?
Most errors come from mixing up gross pay and taxable income, so someone who reads a bracket table and applies the rate to their whole salary, RRSP deductions and CPP included, will always get a number that is too high or too low. Use taxable income.
The other common slip is treating a refund as free money. It’s your own money coming back. If your employer took off more than the final tax, you get the difference. If it took less, you owe it. The tax refund calculator works out which side you land on.
Deductions matter more than credits at higher incomes, because they save tax at your top rate. To see what an extra RRSP dollar is worth, check the marginal tax rate calculator. It has one known quirk, a spike near $200,000 that comes from the health premium step, so read it with that in mind.
Self-employed? The rules for taxable income differ, and there’s a separate tool for that. The engine here covers employment income. Everything else, from dividends to rental profit, needs its own inputs.
Do you have to do this sum yourself?
No. Your employer withholds tax from each paycheque using the same brackets, and tax software or your preparer settles the difference when you file. Doing the sum yourself is useful for planning: deciding on an RRSP deposit, checking a job offer or seeing whether a refund is realistic. For that kind of question, a result within a few hundred dollars is plenty.
Our sources
The federal brackets, CPP and EI figures come from the CRA‘s 2026 payroll tables and rates page. The Ontario brackets, surtax thresholds and health premium come from the CRA’s Ontario payroll tables. We rechecked them on 29 September 2026 and ran every example through our own engine. This site has no connection with the CRA or the Government of Ontario.
Frequently asked questions
How much income tax do I pay on $85,000 in Ontario?
About $15,551.05 in 2026 for an employee: $10,226.60 federal and $5,324.46 Ontario. CPP and EI take another $5,769.52.
Do I pay the Ontario tax rate on all my income?
No. Each rate applies only to the slice of income inside its bracket, both federally and in Ontario.
What is the Ontario health premium?
A charge added to your Ontario tax that rises with income. It is $750 for taxable income between $72,000 and $200,000 and $900 above that.
What is the Ontario surtax?
An extra 20% on Ontario tax above $5,818, plus 36% above $7,446. It affects mostly higher earners.
Does the calculator include the Ontario LIFT credit?
No. The credit exists, but our engine doesn't model it and we couldn't confirm its 2026 indexing.
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