Say you live in Ontario, earn $60,000 elsewhere and get $10,000 of eligible dividends. The extra tax is about $789, or 7.9% of the payout. The same $10,000 paid as other dividends costs $2,028, and the dividend tax calculator below lets you test your own numbers.
How does the gross-up work?
Dividends are taxed the long way round. The tool first raises the amount you received, by 38% for eligible dividends and by 15% for other dividends. That bigger figure joins your taxable income and is charged at ordinary rates. Then the federal and provincial dividend tax credits come off, and that pulls the bill back down, sometimes by a surprising amount.
The number you end up with is the extra tax compared with the same year without the dividends. Eligible dividends tend to be paid by public companies. Other dividends often come from a private company.
Which number on my slip do I type in?
Look at your T5. For eligible dividends the amount you actually received sits in box 24, and for other dividends it’s box 10. Those are the figures to enter. The grossed-up amounts in boxes 25 and 11 are already inflated, so typing them in would count the gross-up twice. The CRA explains each box in its guide to completing the T5 slip.
Four cases side by side
| Case, $10,000 received | Taxable after gross-up | Credits | Extra tax | You keep |
|---|---|---|---|---|
| Ontario, eligible, $60,000 other income | $13,800 | $3,453 | $789 | $9,211 |
| Ontario, other dividends, $60,000 other income | $11,500 | $1,382 | $2,028 | $7,972 |
| Alberta, eligible, $60,000 other income | $13,800 | $3,193 | $980 | $9,020 |
| Ontario, eligible, $30,000 other income | $13,800 | $3,453 | Below zero | Over $10,000 |
Why do eligible dividends cost less?
Their credit is much bigger. In Ontario the credits come to $3,453 on an eligible payout and $1,382 on an other one, and after the bigger gross-up is counted, that leaves about $1,239 less tax on the eligible dividends.
Province matters too, since Alberta’s credit is smaller than Ontario’s here, which is one reason the tax comes to $980 in Alberta instead of the $789 you’d pay in Ontario on the same payout.
The last row looks odd, doesn’t it? With $30,000 of other income, the credits are larger than the tax on the dividends. The calculator shows no extra tax and says the credits also cut the tax on your other income, by $674. That isn’t a payment from the government. The credits only lower tax you would otherwise owe, and they can’t take the total below zero.
Try your own mix. Fill in both types at once and the tool works out one combined tax figure. Then move the other income box up and down to see where the credits stop outweighing the tax. That one test shows how far dividend tax swings with your other earnings, better than any table can.
What should I watch for?
- Enter the amount you actually received. The gross-up is applied for you.
- Your other taxable income is treated as pay, which brings CPP and EI into the sum.
- Dividend income can affect benefits and other amounts that depend on income, and we haven’t modelled those.
- Credit rates for some provinces come from sources we couldn’t confirm, so treat results outside Ontario as estimates.
- Dividends from a foreign company don’t qualify for the Canadian credit, so this tool isn’t the right fit for them.
Is a low-tax dividend always better than interest?
Not automatically. A dividend that’s taxed lightly in your hands comes out of profit the company has usually already paid tax on, and the credit is meant to make up for that. Still, at tax time what matters to you is what’s left in your pocket, and on a few thousand dollars of income a year the gap between eligible dividends and interest can run to several hundred bucks.
Where do I go from here?
To compare dividends with other investment income, the marginal tax rate calculator lists the rate on each kind. If you sell shares instead, open the capital gains tax calculator. And to drop the dividends into a whole return, use the income tax calculator.
The sources behind this page
The gross-up percentages and the tax steps are 2026 figures, which we checked on 29 September 2026 against Canada.ca and provincial pages. We couldn’t read some dividend credit rates directly from an official 2026 page. No level of government runs or endorses this site.
About this calculator
- What it does
- Estimate the tax on eligible and other dividends after the gross-up and dividend tax credit.
- Category
- Income Tax
- Last checked
- September 30, 2026
- Result type
- Estimate for information only, not tax advice.
Frequently asked questions
How are eligible dividends taxed?
The tool raises them by 38%, adds the result to your income and then subtracts credits. On $10,000 in Ontario with $60,000 of other income, the extra tax is $789.
Why do other dividends cost more?
They're raised by only 15% and carry a smaller credit. The same $10,000 costs $2,028 in Ontario.
What if the result is negative?
At low income the credits can be bigger than the tax on the dividends. With $30,000 of other income in Ontario, the tool shows about negative $674.
Which dividends are eligible?
The tool describes them as usually paid by public companies, while other dividends often come from a private company. The paperwork from the company tells you which kind you hold.
Does my province change the tax?
Yes. On $10,000 of eligible dividends with $60,000 of other income, Ontario gives $789 and Alberta $980.
Sources and updates
Updated: . How we check rates · Editorial team · Updates