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The Ontario employer health tax (EHT) costs most small employers nothing, because the first $1 million of yearly Ontario payroll is exempt. Go above that and the tax is worked out on the excess, at rates from 0.98% to 1.95%. We’ve read the search “eht ontario” as this payroll tax.
Who has to pay the Ontario employer health tax?
Employers who pay wages to people working in Ontario. The tax covers salaries, wages, bonuses, taxable benefits and stock options, so it’s wider than the number on a T4 box 14 alone.
You only register if you can’t claim the exemption or if your payroll goes above the exemption you can claim. Most small businesses never do. A shop with six staff sits far below the line. Ontario’s Employer Health Tax page says you don’t have to pay if you’re eligible and your payroll is below the exemption amount.
But there’s a trap for groups.
Associated employers share one exemption, and they have to file the Associated Employer Exemption Allocation Form together or all of them lose the exemption. And from 2014, no exemption at all is available if the group’s combined Ontario payroll is over $5 million, however the allocation is split.
What are the EHT rates?
The rate depends on your total Ontario payroll before the exemption comes off. Ontario’s own page is clear on that point. So an employer with a $1.5 million payroll uses the top rate, even though only $500,000 of it is taxed.
| Total Ontario payroll | Rate |
|---|---|
| Up to $200,000 | 0.98% |
| $200,000.01 to $230,000 | 1.101% |
| $230,000.01 to $260,000 | 1.223% |
| $260,000.01 to $290,000 | 1.344% |
| $290,000.01 to $320,000 | 1.465% |
| $320,000.01 to $350,000 | 1.586% |
| $350,000.01 to $380,000 | 1.708% |
| $380,000.01 to $400,000 | 1.829% |
| Over $400,000 | 1.95% |
How much EHT would you owe on a real payroll?
Our calculators don’t cover EHT, so this is plain arithmetic from the rates above. Take an employer with a $1,500,000 Ontario payroll that qualifies for the exemption. The rate is 1.95%, the taxed amount is $500,000, and the tax is $9,750.
With $1,200,000 of payroll, it’s 1.95% of $200,000, or $3,900.
At $800,000 it’s nothing.
Now the cliff. An associated group with $5,500,000 of payroll gets no exemption, so the bill is 1.95% of the whole amount, $107,250. That’s a far bigger jump than the extra payroll would suggest, and it lands on every dollar, including the first million.
Hiring changes the picture slowly at first. One more employee on $60,000 adds $60,000 to payroll, and if you’re under the exemption, the extra EHT is zero. To see what that hire costs in pay deductions, use the payroll deductions calculator, and for the pay itself try the hourly to salary calculator.
When do you file and pay?
Ontario’s page says the annual return is due on March 15. Employers whose payroll is over $1.2 million pay by monthly instalments, due on the 15th of the following month.
You can file the annual return through the EHT annual return portal without a login, use ONT-TAXS online, or send it by mail. We didn’t confirm penalty amounts for late filing, so read the page before a deadline slips.
The federal side of payroll is separate. CPP, EI and income tax withheld from pay go to the CRA, and the payroll remittance calculator estimates those amounts. If the business is a company, the corporate tax calculator covers its income tax.
Do you still have to file a return if you owe nothing?
Sometimes. The Ontario page lists the cases where an annual return is required, and being under the exemption isn’t automatically a way out. The ones it names include getting a personalized return in the mail, being ineligible for the exemption while having Ontario payroll, and having paid instalments during the year. If any of those fits you, file even if the bottom line is zero. If none does, a zero-tax employer generally has no return to send, but read the list on the page for your own situation.
Mistakes that raise your EHT bill
Forgetting that bonuses count, since a $20,000 year-end bonus pool is part of payroll and can push you over the exemption on its own.
Forgetting related companies. Two associated businesses don’t each get a fresh $1 million. They split one.
Reading the exemption as a rate break. It isn’t. The rate is set by the total payroll first, and only then does the exemption come off. A payroll just over $1 million is taxed at 1.95%, not at the low 0.98% band.
Finally, the exemption is scheduled for an inflation adjustment on January 1, 2029. Until then the Ontario page shows it fixed at $1 million. Check the page each year anyway, since we only read it this year.
What this page is based on
Rates, the exemption, the $5 million rule and the filing dates come from the Ontario government’s Employer Health Tax page, read in 2026. The examples are our own arithmetic on those rates. This site isn’t connected with the Ontario government or the CRA.
Frequently asked questions
What is the Ontario EHT exemption?
The exemption is $1 million of yearly Ontario payroll. Ontario's page says it is scheduled for an inflation adjustment on January 1, 2029.
Who has to register for EHT?
Employers who can't claim the exemption, or whose payroll is above the exemption they can claim.
Which rate applies if I claim the exemption?
The rate is set by your total Ontario payroll before the exemption comes off. A $1.5 million payroll uses 1.95% on the $500,000 above the exemption.
What if my group has over $5 million of payroll?
For 2014 and later years, no exemption can be claimed if the associated group's combined Ontario payroll is over $5 million.
When is the annual EHT return due?
Ontario's page gives March 15. Employers with payroll over $1.2 million also pay monthly instalments due the 15th of the following month.
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