PROVINCIAL AND TERRITORIAL TAX

Every province and territory levies its own personal income tax. Outside Quebec, the CRA collects provincial tax on the same T1 return using a provincial form such as Form ON428 for Ontario. Each jurisdiction sets its own brackets, rates and non-refundable credits, but all use the federal definition of taxable income. The applicable province is the one where the individual resided on December 31 of the tax year, even if the individual lived elsewhere for most of the year. Business income earned through a permanent establishment in another province is allocated among provinces on Form T2203.

ONTARIO 2026 BRACKETS

5.05 percent on taxable income up to $53,891
9.15 percent on taxable income over $53,891 up to $107,785
11.16 percent on taxable income over $107,785 up to $150,000
12.16 percent on taxable income over $150,000 up to $220,000
13.16 percent on taxable income over $220,000

The first two thresholds are indexed (1.9 percent for 2026); the $150,000 and $220,000 thresholds are fixed.

ONTARIO SURTAX

Ontario adds a surtax calculated on basic Ontario tax, after Ontario non-refundable credits. For 2026 it is 20 percent of Ontario tax above $5,818, plus a further 36 percent of Ontario tax above $7,446. The surtax raises the effective top Ontario rate from 13.16 percent to about 20.53 percent, which is why the combined top marginal rate in Ontario is 53.53 percent.

ONTARIO HEALTH PREMIUM

The Ontario Health Premium is collected through the income tax return and is based on taxable income:

Up to $20,000: nil
$20,000 to $36,000: up to $300
$36,000 to $48,000: up to $450
$48,000 to $72,000: up to $600
$72,000 to $200,000: up to $750
Over $200,000: $900

The premium phases in gradually inside each band, and it is not reduced by non-refundable credits.

ONTARIO NON-REFUNDABLE CREDITS (2026)

Basic personal amount: $12,989
Spouse or eligible dependant amount: $11,029
Age amount: $6,342, reduced by 15 percent of net income above $47,210
Pension income amount: $1,796
Disability amount: $10,494
Medical expenses above the lesser of $2,940 or 3 percent of net income
Donations: 5.05 percent on the first $200 and 11.16 percent above $200

All Ontario credits are converted at the lowest Ontario rate of 5.05 percent, except donations above $200. Ontario does not have a Canada-employment-amount equivalent.

ONTARIO TAX REDUCTIONS AND CREDITS

Ontario tax reduction: a basic reduction for lower-income filers, with additional amounts for dependent children and dependants with disabilities, calculated on Form ON428.
Low-income Individuals and Families Tax (LIFT) credit: up to $875 per person, reduced by 5 percent of net income above $32,500 (or adjusted family net income above $65,000). It can reduce Ontario tax to nil but is not refundable.
Ontario Child Care Access and Relief from Expenses (CARE) credit: a refundable credit based on eligible child care expenses and family income.
Ontario Seniors Care at Home credit: a refundable credit for seniors with low to moderate income who have eligible medical expenses.
Ontario Trillium Benefit: a separate monthly benefit; see Ontario Trillium Benefit.

OTHER PROVINCES AND TERRITORIES

Quebec: files a separate provincial return (TP-1) with Revenu Québec and receives the federal abatement.
Alberta: introduced a new 8 percent bracket on the first $60,000 of income in 2025, below its former 10 percent lowest rate.
British Columbia: increased its lowest rate to 5.60 percent for 2026.
Every other jurisdiction has its own 428 form (for example NS428 for Nova Scotia and MB428 for Manitoba) with its own brackets and credits.

KEY POINTS

Province of residence on December 31 determines provincial tax for the whole year.
Provincial credits are separate from federal credits and use different amounts.
Ontario's surtax and Health Premium mean the published bracket rates understate the true Ontario marginal rate at higher incomes.

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