Ontario Income Tax Brackets
Ontario income tax rates will be staying the same in 2021. What is changing is the level of income in the first two tax brackets.
Ontario increases their provincial income thresholds and the basic personal amount through changes in the consumer price index (CPI). This is called the indexing factor. Ontario's indexing factor for 2021 is 0.9%.
The amount of taxable income that applies to the first tax bracket at 5.05% is increasing from $44,740 to $45,142. The second tax bracket at 9.15% is increasing to an upper range of $90,287 from the previous $89,482.
The Ontario Basic Personal Amount was $10,783 in 2020. For 2021, the basic personal amount is increasing to $10,880. If you make less than $10,880, then you are exempt from Ontario’s provincial income tax. You may still need to pay EI premiums and CPP contributions.
Ontario Provincial Income Tax Changes 2021
| 2020 | 2021 | Rate |
|---|---|---|
| Less than $10,783 | Less than $10,880 | 0% |
| $10,784 to $44,740 | $10,881 to $45,142 | 5.05% |
| $44,741 to $89,482 | $45,143 to $90,287 | 9.15% |
| $89,483 to $150,000 | $90,287 to $150,000 | 11.16% |
| $150,001 to $220,000 | $150,001 to $220,000 | 12.16% |
| More than $220,001 | More than $220,001 | 13.16% |
Ontario Health Premium
The Ontario Health Premium helps fund for healthcare services in the province. The health premium is usually deducted automatically from your pay if you are an employee. Otherwise, the health premium is paid when you file your personal income tax return.
The Ontario Health Premium is only paid if you make more than $20,000. If you make less than $20,000 a year, you will not be required to pay the premium.
Self-employed workers who make more than $20,000 a year are required to pay the health premium. Seniors who make more than $20,000 are also required to pay the health premium. This includes income from a pension, Old Age Security (OAS), and Canada Pension Plan (CPP) benefits.
Self-employed workers will need to complete form ON428 to pay their premium. Seniors can choose to have the premium automatically deducted from their OAS and CPP benefits by completing form ISP-3520.
The maximum Ontario Health Premium for 2021 is $900.
Ontario Health Premium 2021
| Income | Ontario Health Premium (Lesser of) |
|---|---|
| $20,000 or less | $0 |
| $20,001 to $36,000 | $300 or 6% of income above $20,000 |
| $36,001 to $48,000 | $450 or $300 plus 6% of income above $36,000 |
| $48,001 to $72,000 | $600 or $450 plus 25% of income above $48,000 |
| $72,001 to $200,000 | $750 or $600 plus 25% of income above $72,000 |
| $200,001 or more | $900 or $750 plus 25% of income above $200,000 |
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 2021
| Provincial Tax Payable | Ontario Surtax |
|---|---|
| $4,874 or less | $0 |
| $4,875 to $6,237 | 20% of provincial tax payable over $4,874 |
| $6,238 or more | 20% of provincial tax payable over $4,874 plus 36% of provincial tax payable over $6,237 |
Canada Pension Plan
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.
CPP Contribution Rate
| Year | Maximum Contributory Earnings | Contribution Rate (Employee/Employer) | Combined Contribution Rate |
|---|---|---|---|
| 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
Employment Insurance
All workers must pay premiums towards the federal employment insurance program.
Self-employed workers are not required to do so, 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 benefits.
EI Premium Rates
| Year | Maximum Annual Insurable Earnings | EI Premium Rate | Maximum Employee Premium | Maximum Employer Premium |
|---|---|---|---|---|
| 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
