Ontario Tax Guide 2026

Ontario uses a progressive tax system with five income brackets for 2026. The lowest rate is 5.05% on the first $51,446 of taxable income, rising to 13.16% on income above $220,000. On top of the base provincial tax, Ontario levies a surtax: 20% of basic provincial tax exceeding $4,991 and an additional 36% of basic provincial tax exceeding $6,387. This surtax effectively increases the top combined marginal rate for high earners.

Ontario residents benefit from several provincial credits. The Ontario Trillium Benefit combines the Ontario Energy and Property Tax Credit, the Northern Ontario Energy Credit, and the Ontario Sales Tax Credit into a single monthly payment. The Ontario Child Benefit provides up to $1,509 per child annually for eligible families. The Ontario Jobs Training Tax Credit offers 50% of eligible training expenses up to $2,000.

To reduce your Ontario tax bill, maximize RRSP contributions (which reduce both federal and provincial tax), claim all eligible medical expenses (Ontario has a lower medical expense threshold than the federal amount), and consider income splitting with a spouse through spousal RRSP contributions or pension income splitting if you are retired. Ontario also offers the Ontario Seniors' Home Safety Tax Credit for homeowners aged 65+ making accessibility modifications.

The Ontario Surtax is a unique feature that effectively creates additional tax brackets for higher earners. It is calculated as 20% of basic provincial tax over $4,991 plus 36% of basic provincial tax over $6,387. This means that Ontario's true top marginal rate is higher than the posted 13.16% bracket rate — the surtax pushes the effective provincial rate above 20% for top earners, resulting in a combined federal-provincial rate exceeding 53%. Understanding the surtax is important when planning RRSP contributions, as reducing your taxable income below the surtax thresholds can yield outsized tax savings.

Ontario's housing market — particularly in the Greater Toronto Area — makes the First Home Savings Account (FHSA) especially relevant. With average home prices well above $800,000 in the GTA, the combined power of the FHSA ($40,000 lifetime) and the Home Buyers' Plan ($60,000 from RRSP) provides up to $100,000 in tax-advantaged savings toward a down payment. The Ontario Land Transfer Tax applies on top of the municipal Toronto Land Transfer Tax for homes purchased within the City of Toronto, so first-time buyers should factor in both rebates (up to $4,000 provincial and $4,475 municipal) when budgeting. The Low-income Individuals and Families Tax (LIFT) credit can eliminate provincial tax entirely for workers earning up to approximately $50,000, making it one of Ontario's most impactful credits for moderate-income earners.