Ontario Income Tax Brackets
Ontario income tax rates will stay the same in 2024. What is changing is the level of income in the first two tax brackets.
Ontario adjusts its provincial income thresholds, basic personal amount, and tax reduction amounts based on changes in the consumer price index (CPI). This is called the indexing factor. Ontario's indexing factor for 2024 is 4.5%.
Ontario Provincial Income Tax Changes 2024
| 2023 | 2024 | Rate |
|---|---|---|
| Less than $49,231 | Less than $51,446 | 5.05% |
| Over $49,231 to $98,464 | Over $51,446 to $102,894 | 9.15% |
| Over $98,464 to $150,000 | Over $102,894 to $150,000 | 11.16% |
| Over $150,000 to $220,000 | Over $150,000 to $220,000 | 12.16% |
| More than $220,000 | More than $220,000 | 13.16% |
The Ontario Basic Personal Amount was $11,865 in 2023. For 2024, the basic personal amount is increasing to $12,399. If you make less than $12,399, then you are exempt from Ontario’s provincial income tax. You may still need to pay EI premiums and make CPP contributions.
Ontario Income Tax Credits
Ontario Tax Reduction
The Ontario Tax Reduction is a credit that reduces or eliminates the provincial tax you have to pay. For 2023, the basic amount was $274, and the amount for every dependent and child was $506. This amount will increase by 4.5% for 2024.
Low-Income Workers Tax Credit
For 2024, Ontario residents having an individual adjusted net income of up to $50,000 or adjusted family net income of up to $82,500 can receive the Low-Income Workers Tax Credit. The credit amount for individuals with an income of up to $32,500 and families with an income of up to $65,000 is $875 or 5.05% of the employment income, whichever is lower.
For those whose income exceeds the thresholds, the maximum amount is reduced by 5% of the greater of your:
- adjusted individual net income over $32,500
- adjusted family net income over $65,000
Ontario Trillium Benefit
The Ontario Trillium Benefit combines three different credits to help Ontarians pay for energy costs, property taxes and sales tax. The three credits are:
- Northern Ontario Energy Credit - Maximum of $180 for individuals and $277 for families.
- Ontario Energy and Property Tax Credit - Maximum of $1,248 if you are between 18 and 64 years of age, maximum of $1,421 if you are 65 or older.
- Ontario Sales Tax Credit - Up to $360 plus up to $360 for your spouse/common-law partner and each dependent child.
You should be eligible for at least one of the three benefits listed to receive the credit. You will receive the benefit amount through direct deposit or mail.
Other Tax Credits
You can also claim some other credits to reduce the provincial tax payable, such as:
- Spouse or common-law partner amount
- Eligible Dependent Amount
- Age amount
- Ontario caregiver amount
- Disability amount
- Medical expenses
A full list of tax credits and benefits offered by the Ontario government is available on the tax credits and benefits page on their website.
The History of Ontario Provincial Income Taxes
1985-1995 (Increasing Taxes)
Following the 1982 recession, provincial governments across Canada found themselves with ballooning debt. As a result, Ontario needed to increase taxes to pay off the debt aggressively. In this period, provincial income tax increased from 48% of the basic federal rate to 58% by 1995. Ontario also created an additional surtax for high-income earners.
1996-2001 (Decreasing Taxes)
By 1996, Ontario had managed to pay off a significant portion of its debt due to the previous period’s operating surplus. As a result, Ontario’s tax policy changed dramatically. In 1996, a 30% reduction in personal income tax was announced, with an additional 20% reduction in 1999.
2002-2017 (New Taxes, Recession)
By the mid-2000s, Premier Dalton McGuinty (Liberal) was elected and rolled back a series of income tax cuts. Provincial funding increased for healthcare amidst the SARS pandemic, and so a new controversial tax, known as the Ontario Health Premium, was implemented. McGuinty’s second term focused on easing the economic damage caused by the 2008 recession. This saw the lowest income tax rate cut by one percentage point. Kathleen Wynne (Liberal) was elected after McGuinty and increased taxes for high-income earners.
2018-Present
Premier Doug Ford (Conservative) was elected in 2018. His campaign included promises for income tax cuts across the board for low, middle, and high-income earners. Premier Ford had promised to cut the second income tax bracket from 9.15% to 7.32%. However, only the Low-Income Individuals and Families Tax Credit (LIFT) has been implemented, and the second income tax bracket remains at 9.15%.
Ontario Surtax
The Ontario Surtax is a tax on tax paid. If you have to pay more than a certain amount of tax, you will need to pay an additional surtax on that tax.
Ontario Surtax Rates 2024
| Basic Provincial Tax Payable | Ontario Surtax |
|---|---|
| $5,554 or less | $0 |
| $5,554 to $7,108 | 20% of provincial tax payable over $5,554 |
| $7,108 or more | 20% of provincial tax payable over $5,554 plus 36% of provincial tax payable over $7,108 |
Canada Pension Plan
The Canada Pension Plan (CPP) is a monthly, taxable benefit that you receive as part of your income in retirement. The amount you receive in retirement depends on your average earnings, contributions to the program, and the age you start receiving payments. To qualify for CPP, you must be over 60 and have made valid contributions while working.
Employed workers must pay half the required contribution while their employers pay the other half. All workers over the age of 18 who make more than $3,500 will be required to make CPP contributions on their earnings over $3,500. Self-employed workers who make more than $3,500 must also make CPP contributions. However, self-employed workers are required to make the total contribution out of pocket.
CPP Contribution Rate
| Year | Maximum Contributory Earnings | Contribution Rate (Employee/Employer) | Combined Contribution Rate |
|---|---|---|---|
| 2024 | $65,000 | 5.95% | 11.90% |
| 2023 | $63,100 | 5.95% | 11.90% |
| 2022 | $61,400 | 5.70% | 11.40% |
| 2021 | $58,100 | 5.45% | 10.9% |
| 2020 | $55,200 | 5.25% | 10.5% |
| 2019 | $53,900 | 5.10% | 10.2% |
| 2018 | $52,400 | 4.95% | 9.9% |
| 2017 | $51,800 | 4.95% | 9.9% |
Source: Canada Revenue Agency
Second Additional CPP Contribution (CPP2)
Starting from 2024, in addition to the CPP determined from the above table, those earning over $68,500 will have to make an additional enhanced contribution called the CPP2. The table below outlines the CPP2 contributions for 2024.
CPP2 Contribution
| Year | Additional Maximum Annual Pensionable Earnings | Contribution Rate (Employee/Employer) | Maximum Contribution (Employee/ Employer) | Combined Contribution Rate | Combined Maximum Contribution |
|---|---|---|---|---|---|
| 2024 | $73,200 | 4% | $188 | 8% | $376 |
Employment Insurance
All employed workers must pay premiums towards the federal employment insurance program. The program will provide temporary support in case of unemployment while you look for another job and are willing to work. However, you are only eligible for the benefits if you paid premiums in the past year. Employment Insurance (EI) is shared between the employer and the employee. However, the employer must generally contribute 1.4 times the employee’s premiums to the program.
Self-employed workers are not required to contribute. However, they can still enroll if they wish to do so. Self-employed workers are not eligible for regular EI benefits, which are for loss of work. They are only eligible for special EI benefits, such as sickness and maternity benefits.
EI Premium Rates
| Year | Maximum Annual Insurable Earnings | EI Premium Rate | Maximum Employee Premium | Maximum Employer Premium |
|---|---|---|---|---|
| 2024 | $63,200 | 1.66% | $1049.12 | $1468.77 |
| 2023 | $61,500 | 1.63% | $1,002.45 | $1,403.43 |
| 2022 | $60,300 | 1.58% | $952.74 | $1,332.63 |
| 2021 | $56,300 | 1.58% | $889.54 | $1,245.36 |
| 2020 | $54,200 | 1.58% | $856.36 | $1,198.90 |
| 2019 | $53,100 | 1.62% | $860.22 | $1,204.31 |
| 2018 | $51,700 | 1.66% | $858.22 | $1,201.51 |
| 2017 | $51,300 | 1.63% | $836.19 | $1,170.67 |
Source: Canada Revenue Agency