Ontario Tax Brackets for 2022

Residents of Canada are expected to pay taxes on taxable income earned in the past year after factoring in all applicable tax deductions and credits.

If you live in Ontario, come April 30th, when you should have filed your tax return, you will pay income taxes based on Ontario’s tax brackets as well as income taxes based on the federal tax brackets for the previous tax year.

Canada’s taxation system is a “progressive” one, meaning that the more money you make, the more taxes you pay.

Tax rates vary depending on the type of income you are reporting, e.g. employment income, interest income, dividends, and capital gains. The fixed tax bracket amounts increase every year depending on the inflation rate.

The combined federal and provincial tax rate that applies to your taxable income is referred to as your marginal tax rate.

Both federal and provincial taxes are administered by the Canada Revenue Agency, except for Quebec, where it is collected via Revenu Quebec.

2022 Ontario Income Tax Brackets and Rates

Here are the Ontario income tax brackets for the 2021 and 2022 tax years:

2022 Taxable Income	2022 Tax Rate	2021 Taxable Income	2021 Tax Rate
Up to $46,226	5.05%	Up to $45,142	5.05%
Over $46,227 up to $92,454	9.15%	Over $45,142 up to $90,287	9.15%
Over $92,455 to $150,000	11.16%	Over $90,287 to $150,000	11.16%
Over $150,000 to $220,000	12.16%	Over $150,000 to $220,000	12.16%
Over $220,000.01	13.16%	Over $220,000.01	13.16%

Here’s a quick take on how the above tax brackets worked for 2022. You pay:

• 5.05% on the first $46,226 of taxable income, plus
• 9.15% on the next $46,228 (i.e. on the portion of taxable income over $46,226 up to $92,454), plus
• 11.16% on the next $57,546 (i.e. on the portion of taxable income over $92,454 up to $150,000), plus
• 12.16% on the next $70,000 (i.e. on the portion of taxable income over $150,000 up to $220,000), plus
• 13.16% on the amount exceeding $220,000

We will cover some scenarios later in this article to show how you can calculate your combined provincial and federal marginal tax rate.

2022 Federal Tax Brackets and Rates

The federal tax rates in Canada follow the same pattern, with rates increasing as your taxable income increases.

For 2022, you pay:

• 15% on the first $50,197 of taxable income, and
• 20.50% on the next $50,195 of taxable income (on the portion of taxable income over $50,197 up to $100,392), and
• 26% on the next $55,233 of taxable income (on the portion of taxable income over $100,392 up to $155,625), and
• 29% on the next $66,083 of taxable income (on the portion of taxable income over $155,625 up to $221,708), and
• 33% of taxable income exceeding $221,708

Taxable Income	Tax Rate
Up to $50,197	15%
Over $50,197 up to $100,392	20.50%
Over $100,392 up to $155,625	26%
Over $155,625 up to $221,708	29%
$221,708 and over	33%

What is Your Marginal Tax Rate in Ontario?

Your marginal tax rate is the tax rate levied on an additional dollar of income. For example, if an Ontarian earned $1 above $45,142 in 2021 (i.e. they earned $45,143), their marginal tax rate jumps from 5.05% to 9.15%.

This jump in tax rate is due to their income rising to the next income bracket due to the extra dollar earned.

Marginal tax rates can be deceiving. The Ontarian in our example won’t pay a flat 9.15% rate on their total income. Instead, they would pay 5.05% tax on $45,142, and 9.15% on $1.

In real terms, their average tax rate would be closer to 5.05% than it is to 9.15%.

Average Tax Rate

The average or “effective” tax rate is the actual percentage of your income that is paid out as tax.

Average Tax Rate = Tax Paid / Total Income x 100%.

Ontario Marginal vs Average Tax Rate Example

Let us assume Mr. Bola Owolabi who lives in Toronto earns an income of $95,000 per year. His provincial marginal and average tax rates are as follows:

Tax Bracket	Marginal Tax Rate	Taxable Income	Tax Paid
$0 – $45,142	5.05%	$45,142	$2,279.67
$45,142 – $90,287	9.15%	$45,145	$4,130.77
$90,287 – $95,000	11.16%	$4,713	$525.97
Total		$95,000	$6,936.41

Mr. Owolabi’s provincial marginal tax rate is apparent at 11.16% as this is the highest tax rate he pays on an additional dollar of income.

However, his average tax rate paints a different picture and is 7.30%, calculated as ($6,936.41/$95,000).

Combined Ontario and Federal Tax Rates

In addition to paying provincial taxes, Mr. Owolabi in the example above is also required to pay federal taxes.

Based on his taxable income of $95,000, he would pay federal taxes as follows:

• On the first $49,020 of income, he is taxed at 15% and pays $7,353 in taxes
• On the remaining $45,980 income (i.e. $95,000 – $49,020), he is taxed at 20.50% resulting in $9,425.90 in taxes

Therefore, his total Federal taxes paid is $16,778.90 (calculated as $7,353 + $9,425.90).

Mr. Owolabi’s provincial (Ontario) + federal taxes amount to a total of $23,715.31* (calculated as $6,936.41 + $16,778.90).

*The taxes here do not reflect the federal basic personal tax credit amount.

Income from various sources may be treated differently.

Regular employment income, self-employment income, and pension payments are taxed using the standard provincial and federal marginal tax rates. The top combined marginal tax rate in Ontario for regular income and interest in 2022 is 53.53%.

Interest income, e.g. income earned from a savings or GIC account is fully taxable. Whereas only 50% of capital gains are included in your taxable income. The highest marginal tax rate for capital gains in 2022 is 26.77%.

Dividends are divided into eligible and non-eligible dividends and are taxed differently. Your taxable income is impacted when you gross up the dividend amount and apply the dividend tax credit. The highest marginal rate on eligible dividends in 2022 is 39.34%.

Most income from gifts, inheritances, lottery winnings, Canada Child Benefit, GST Credit, Tax-Free Savings Account, life insurance policy, and death benefit payments do not count as taxable income.

If you are looking to calculate your income taxes or want to play around with the various scenarios, this tax calculator by Ernst & Young is useful.

Ontario Tax Credits and Deductions

You can reduce your taxes using deductions and tax credits available federally and provincially.

Deductions lower your taxable income and include RRSP contributions, child care expenses, interest expenses, union and professional dues, Canada Pension Plan contributions, employment expenses, and more.

Tax credits are either refundable or non-refundable.

A non-refundable tax credit can only lower the taxes you owe. They do not result in a tax refund. Examples include the basic personal amount which is $14,398 for 2022, and the first-time home buyers’ amount.

A refundable tax credit lowers your taxes owing and can result in a tax refund if you have excess tax credits. An example is the GST/HST credit.

For more on federal deductions and tax credits, click here.

Some of the tax credits specific to Ontario are:

• Low-income Individuals and Families Tax Credit
• Ontario Child Care Tax Credit
• Ontario Trillium Benefit: includes the Northern Ontario Energy Credit, Ontario Energy and Property Tax Credit, and Ontario Sales Tax Credit
• Ontario Seniors’ Public Transit Tax Credit
• Political Contribution Tax Credit
• Community Food Program Donation Tax Credit

How To File Your Tax Return in Canada

Canadians are required to file an income tax return for the previous year by April 30 (May 2^nd for 2022). If you are self-employed, you have until June 15.

Filing your tax return on time is important even if you don’t have income to report as Canada Revenue Agency (CRA) uses the information provided to assess your eligibility for government benefit programs such as the Canada Child Benefit and Guaranteed Income Supplement.

If you do not meet the tax deadline date and owe taxes, CRA will charge you a late-filing penalty.

You can file your taxes in Ontario using a:

• Free tax clinic if your income is modest, e.g. under $35,000 for one person, and if your tax situation is simple.
• Paper tax return. This takes longer for your tax refund to be processed. you can download tax forms here.
• Free tax return software such as Wealthsimple Tax and TurboTax.
• Paid tax software or tax preparation service.

Related: Free Tax Return Software in Canada

Ontario Tax Brackets FAQ

Have questions about taxes in Ontario? Leave them in the comments.