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Your marginal tax rate is the tax on the next dollar you earn, and it’s always higher than the average rate on your whole income. In Ontario, a person earning $60,000 has an average rate of 13.9% but a marginal rate of 29.65% on extra income, according to our 2026 calculator.
Marginal tax rates vs the average you actually pay
People mix these up constantly. Divide your total income tax by your income and you get the average. The marginal rate belongs to the top slice alone. Each step of income has its own rate, so a raise never reaches back and reprices the dollars you already earned.
So don’t turn down a raise to dodge a bracket. You always come out ahead.
What are the marginal rates in Ontario in 2026?
Federal and provincial steps stack on each other. The federal step is 14% at the bottom and 20.5% from $58,523 to $117,045, then 26% up to $181,440, based on the 2026 figures used by our engine. Add Ontario’s own step and, higher up, its surtax, and you get the totals below.
| Employment income | Income tax | Average rate | Marginal rate |
|---|---|---|---|
| $40,000 | $4,362.71 | 10.9% | 19.05% |
| $60,000 | $8,320.50 | 13.9% | 29.65% |
| $95,000 | $18,516.05 | 19.5% | 29.65% |
| $130,000 | $31,228.67 | 24.0% | 43.41% |
| $170,000 | $48,886.92 | 28.8% | 44.97% |
The jump between $95,000 and $130,000 looks big. It comes from crossing the federal 26% step and Ontario’s higher steps in one stretch. Near $200,000 the tool shows something odd because of Ontario’s health premium, so we’ve left that range out on purpose. For your own numbers, open the marginal tax rate calculator.
What does a raise actually leave you?
Take that $60,000 earner in Ontario and give them $5,000 more. The engine adds $1,405.00 in income tax, a little under 29.65% of the raise, and $379.00 in CPP and EI. So about $3,216 of the $5,000 stays with you. The salary increase calculator shows the same thing as a pay cheque.
Payroll deductions matter here. Marginal rates cover income tax only, and CPP and EI come on top until you hit their yearly limits. Past those limits, a raise loses less than the table suggests.
Is the rate different for gains and dividends?
Yes, quite a lot. The same $60,000 earner in Ontario has a marginal rate of 14.82% on a capital gain, since only half of the gain counts as income. On eligible dividends the engine shows 6.39%, because of the dividend tax credit. At $40,000 the eligible dividend figure is negative, at minus 8.24%. That means extra dividends can lower a low earner’s tax on the return, and it comes from credits, not from a rule that pays you to earn dividends.
Two of those rates come with limits. The dividend rates aren’t confirmed on a CRA rate page, since we only saw them through search excerpts and a news release, and the Ontario dividend credit rates come from a CRA form. Treat them as estimates. To model a sale, use the capital gains tax calculator.
Where marginal rates mislead you
A few traps are worth knowing. Benefits such as the Canada Child Benefit shrink as your income rises, and that can add a hidden layer on top of tax. An RRSP contribution saves you tax at your marginal rate, which is why it pays more the higher you sit. Our tool doesn’t add benefit clawbacks to its result, so a family with children should test that separately.
Provinces matter too. In Alberta, the same $95,000 income gives a marginal rate of 30.5%, a bit above Ontario’s 29.65%. Look at the whole bill, not one rate.
Where the numbers come from
Brackets and credits come from the Canada Revenue Agency’s 2026 federal figures and the provincial data files behind our engine. Some items, such as the Ontario health premium slope and the dividend rates, are not confirmed on an official page, and we say so above. This website has no connection with the CRA or any other government body.
Frequently asked questions
What is a marginal tax rate?
It is the tax on your next dollar of income. It applies to the top slice only, so it is higher than your average rate.
Can a raise push me into a lower take-home pay?
No. A higher bracket applies only to the money above the line, so a raise always leaves you with more.
What is the marginal rate on $60,000 in Ontario?
Our 2026 calculator gives 29.65% on extra ordinary income, against an average rate of 13.9%.
Are capital gains taxed at the same marginal rate?
No. Only half of a gain is added to income, so the rate on a gain is roughly half. The calculator shows 14.82% at $60,000 in Ontario.
Do CPP and EI count in the marginal rate?
Not in the table here. They come on top of income tax until you reach their yearly maximums.
- 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
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.