Free Ontario Payroll Tax Calculator

How to Use the Ontario Payroll Tax Calculator (Step-by-Step)

Understanding your paycheck is crucial, and our Ontario Payroll Tax Calculator simplifies the process. Follow these easy steps to get an accurate estimate of your net pay:

Step 1: Enter Your Location and Filing Status

Country: Ensure “Canada” is selected. (This is pre-filled.)
Province/State: Choose “Ontario” from the dropdown menu. (This is pre-filled.)
Federal Claim Amount: Enter your federal personal amount. This amount affects the amount of federal income tax withheld from your paycheck. (Use your TD1 form as a guide.)
Provincial Claim Amount: Enter your Ontario provincial personal amount. This amount affects the amount of Ontario provincial income tax withheld from your paycheck. (Use your TD1ON form as a guide.)

Step 2: Input Your Pay Information

Annual Pay Periods: Select how often you receive your paycheck (e.g., Bi-Weekly (26), Weekly, Monthly) from the dropdown. This is essential for accurate annual calculations.
Gross Wage/Pay Period: Enter your total earnings before any deductions for the pay period. This is your gross pay.
Pay Date: Select the pay date using the calendar tool. This is for your reference and does not affect the tax calculations.

Step 3: Calculate Your Taxes

Click the “Calculate →” button.
The calculator will instantly display your estimated:
- Pay Period Section:
  - Taxable Income: The portion of your income subject to taxes for the pay period.
  - Federal Tax: The estimated federal income tax withheld for the pay period.
  - Provincial Tax: The estimated Ontario provincial income tax withheld for the pay period.
  - Total Tax: The sum of federal tax and provincial tax for the pay period.
- Annual Section:
  - Taxable Income: Your estimated annual taxable income.
  - Federal Tax: Your estimated annual federal income tax.
  - Provincial Tax: Your estimated annual Ontario provincial income tax.
  - Total Tax: Your estimated total annual taxes.

Step 4: Review and Adjust (If Needed)

Carefully review the calculated results.
If you need to make changes, adjust the input fields and click “Calculate” again.
To start a new calculation with different parameters, click the “New Calculation” button.

Important Notes:

This calculator provides estimates based on the information you provide.
Actual tax and deduction amounts may vary based on individual circumstances and additional deductions.
For precise tax calculations, consult a tax professional or refer to official Canada Revenue Agency (CRA) and Ontario government resources.
Keep your TD1 and TD1ON forms updated to ensure accurate tax withholding.

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Important Information for Ontario Employers Using the Payroll Tax Calculator

This section provides essential information for Ontario employers regarding payroll responsibilities, deductions, and related procedures. Please review this information carefully to ensure compliance with Canadian Revenue Agency (CRA) regulations.

Payroll Program Account Registration

When to Register: You must register for a payroll program account if you:
- Pay salaries or wages.
- Pay tips or gratuities.
- Pay bonuses or vacation pay.
- Provide benefits or allowances to employees.
- Need to report, deduct, and remit amounts from other remuneration (e.g., pensions).
Existing Business Number (BN): If you already have a BN, you can add a payroll program account to it.
No BN: If you don’t have a BN, you must apply for one and register for a payroll program account before your first remittance is due.
Registration: Visit canada.ca/business-number for BN and CRA account information or to register online.
Assistance: For payroll deduction questions, visit canada.ca/payroll or call 1-800-959-5525.

Authorized Representatives

Authorization:

As a business owner, you can authorize representatives (employees, accountants, etc.) to act on your behalf.
Authorize representatives online through Represent a Client at canada.ca/taxes-representatives.
For help, visit canada.ca/.

Employer Responsibilities

Key Responsibilities:
- Open and maintain a payroll program account.
- Obtain employees’ Social Insurance Numbers (SINs).
- Obtain completed federal (TD1) and Ontario (TD1ON) tax credit forms.
- Deduct CPP contributions, EI premiums, and income tax.
- Remit deductions and your share of CPP and EI.
- Report income and deductions on T4 or T4A slips.
- Issue Records of Employment (ROEs) when employees leave.
- Maintain accurate records.
Consequences of Non-Compliance: Failure to comply may result in penalties.
Employee vs. Self-Employed: Correctly classify workers to ensure proper EI entitlement and compliance.
- Generally, you are an employer if you pay salaries, wages, or provide taxable benefits.
- Written contracts do not override actual employer-employee relationships.
- Request a CPP/EI ruling from the CRA if uncertain (canada.ca/).
Trustees: Trustees (liquidators, receivers, etc.) are responsible for payroll deductions.
- Trustees in bankruptcy must hold deducted amounts in trust.
- Continue deductions and remittances if operating a bankrupt business.
- Report payments on T4A slips (canada.ca/t4a-information-payers).
Payer of Other Amounts: Payers of pension, lump-sum, and other income must report these on T4A slips (canada.ca/t4-information-employers).

Keeping Records

Maintain paper and electronic records for at least six years.
Request permission to destroy records earlier using Form T137 (canada.ca/taxes-records).

Social Insurance Numbers (SINs)

Request employees’ SINs within three days of employment.
Document efforts to obtain SINs.
Failure to obtain a SIN can result in penalties.
Report incorrect SINs can affect employee benefits.
Issue accurate ROEs with correct SINs.
SINs beginning with 9 indicate temporary work permits. Verify expiry dates.

Payroll Deduction Tables

Use CRA resources to calculate CPP, EI, and income tax deductions:
- Payroll Deductions Online Calculator (PDOC) (canada.ca/pdoc)
- Payroll Deductions Tables (T4032) (canada.ca/)
- Payroll Deductions Supplementary Tables (T4008)
- Payroll Deductions Formulas (T4127)
Use the appropriate tax tables based on the employee’s province or territory of employment (canada.ca/payroll-employee-info).

Payer Responsibilities:

Payers of other amounts (pension, lump-sum payments, etc.) must report these on T4A slips (except retiring allowances, which are on T4 slips).
For more information on T4A slips: canada.ca/t4a-information-payers.
For more information on T4 slips: canada.ca/t4-information-employers.
For more information on deducting tax from pensions: Guide RC4157

Employer Responsibilities Summary

Employee Leaving:
- Issue a T4 slip for year-to-date earnings.
- Issue an ROE within five calendar days (canada.ca/en/employment-social-development/programs/ei/ei-list/ei-roe).
- Contact Service Canada’s Employer Contact Centre at 1-800-367-5693.
No Employees for a Period: Notify the CRA via My Business Account or TeleReply.
Business Changes:
- Notify the CRA of business closures or changes (1-800-959-5525).
- Issue final remittances, T4/T4A slips, and ROEs.
- Close the business number and CRA accounts.
- Amalgamations have special rules.
- Restructures may require a new BN.

Filing Information Returns

File T4 or T4A slips by the last day of February (canada.ca/t4-information-employers, canada.ca/t4a-information-payers).

Penalties, Interest, and Other Consequences

Failure to Deduct: You are liable for unpaid CPP, EI, and income tax, plus penalties.
Failure to Remit: Penalties apply for late or non-remittance.
Interest: Interest is charged on unpaid amounts.
Summary Convictions: Non-compliance can result in fines or imprisonment.
Director’s Liability: Directors may be held liable for unpaid amounts.
Penalty and Interest Relief: Apply for relief in certain circumstances (canada.ca/penalty-interest-relief).

Appeals

Appeal payroll assessments or CPP/EI rulings within 90 days.
Use My Business Account, Represent a Client, My Account, or specific appeal forms (T400A, CPT100, CPT101).
For more information, see Publication P148 and Guide P133.

Ontario Income Tax Rates and Brackets: 2024 & 2025

This section details the Ontario income tax rates and brackets for both 2024 and the projected 2025 tax year, along with combined federal and Ontario marginal tax rates, and key information regarding surtaxes and personal amounts.

Ontario Provincial Tax Brackets

Ontario’s provincial income tax system employs progressive tax brackets, meaning higher portions of income are taxed at higher rates. For 2025, the brackets have been adjusted for inflation, with the exception of the $150,000 and $220,000 thresholds.

2025 Tax Brackets:
- The first $52,886 of taxable income is taxed at 5.05%.
- Income between $52,886 and $105,775 is taxed at 9.15%.
- Income between $105,775 and $150,000 is taxed at 11.16%.
- Income between $150,000 and $220,000 is taxed at 12.16%.
- Income exceeding $220,000 is taxed at 13.16%.
2024 Tax Brackets:
- The first $51,446 of taxable income is taxed at 5.05%.
- Income between $51,446 and $102,894 is taxed at 9.15%.
- Income between $102,894 and $150,000 is taxed at 11.16%.
- Income between $150,000 and $220,000 is taxed at 12.16%.
- Income exceeding $220,000 is taxed at 13.16%.

Combined Federal and Ontario Marginal Tax Rates

The following highlights the combined marginal tax rates for various income types, including other income, capital gains, and Canadian dividends (eligible and non-eligible). These rates include Ontario surtaxes.

Key Considerations:
- Marginal tax rates for dividends are calculated based on actual dividends received, not the grossed-up taxable amount.
- Marginal tax rates for capital gains are calculated based on total capital gains, not taxable capital gains.
- Gross-up rates for eligible and non-eligible dividends are 38% and 15%, respectively.
- Surtaxes are calculated before dividend tax credits.
- The Ontario Health Premium is not included in these rates, and would increase the marginal tax rates.

Ontario Surtaxes

Ontario applies surtaxes to provincial income tax exceeding certain thresholds.

2025 Surtaxes:
- A 20% surtax applies to Ontario tax exceeding $5,710.
- An additional 36% surtax applies, bringing the total surtax to 56%.
- For individuals with only the basic personal amount, the surtax starts at a taxable income of $93,132.
2024 Surtaxes:
- A 20% surtax applies to Ontario tax exceeding $5,554.
- An additional 36% surtax applies.
- For individuals with only the basic personal amount, the surtax starts at a taxable income of $90,599.
The 56% total surtax increases the highest Ontario tax rate to 20.53% (13.16% x 1.56).

Basic Personal Amounts

Ontario Basic Personal Amount:
- 2025: $12,747 (taxed at 5.05%).
- 2024: $12,399 (taxed at 5.05%).
Federal Basic Personal Amount:
- 2025: $14,538 minimum / $16,129 maximum (taxed at 15%).
- 2024: $14,156 minimum / $15,705 maximum (taxed at 15%).
Federal and Ontario tax brackets and personal tax credit amounts are increased for 2025 by indexation factors, with the exception of the $150,000 and $220,000 ontario bracket amounts. The federal indexation factor is 1.027 and the Ontario indexation factor is 1.028.

Understanding Ontario Pay Statements and Payroll Practices

Providing clear and accurate pay statements is a fundamental responsibility for employers in Ontario. These statements, also known as pay stubs or statements of earnings, serve as a crucial record of employee compensation and deductions.

Required Information on Pay Statements:

When issuing payments to employees, you are legally obligated to provide a statement of earnings on or before the designated payday. This statement must include, at a minimum, the following details:

Pay Period: The specific dates covered by the payment.
Wage and Overtime Rates: The employee’s regular hourly wage rate and any applicable overtime rates.
Hours of Work: A breakdown of regular hours worked and overtime hours worked.
Gross Pay: The total earnings before any deductions, with separate listings for each component, such as:
- Regular wages
- Overtime pay
- General holiday pay
- Vacation pay
Deductions: A detailed list of all deductions from the employee’s earnings, along with the reason for each deduction (e.g., income tax, CPP, EI, benefit contributions).
Room and Board Amounts: Any amounts deducted for room and board provided by the employer.
Hours in Lieu of Overtime: Any hours taken off in lieu of overtime pay.
Net Pay: The final amount of wages paid to the employee after all deductions.

Electronic Pay Statements and Privacy:

Electronic pay statements are acceptable, provided that employees have confidential access to view and print them. Employers must ensure the privacy and confidentiality of employee payroll information, in compliance with relevant privacy legislation.

Record Keeping:

It is essential to maintain accurate employment records, including pay statements, for a minimum of three years.

Pay Frequency and Paydays:

Employers have the flexibility to determine the frequency of paydays, which can be weekly, bi-weekly, semi-monthly, monthly, or any other specified period. Bi-weekly pay periods, with paydays typically falling on Fridays, are commonly used.

Payment of Wages:

All wages earned within a pay period must be paid to employees by the designated payday. It is crucial to adhere to this schedule to ensure timely compensation for employees.

Prohibited Wage Deductions, Leaves of Absence, Workers' Compensation, and Termination Notices in Ontario

This section provides crucial information for Ontario employers regarding prohibited wage deductions, various types of leaves of absence, workers’ compensation obligations, and termination notice requirements.

Prohibited Wage Deductions:

Employers in Ontario are legally restricted from making certain deductions from an employee’s wages, even if there is a collective agreement or a written agreement in place. These prohibited deductions include:

Deductions for faulty work performed by an employee.
Deductions for cash shortages or property loss if someone other than the employee had access to the cash or property.
Deductions for cash shortages resulting from an employee not collecting the full purchase price from a customer.
Deductions to cover the cost of purchasing, using, repairing, or cleaning uniforms or special clothing that an employee is required to wear at work.

Leaves of Absence:

While Ontario does not mandate paid sick leave, employers may offer it at their discretion through employment contracts. The federal government does have its own rules regarding paid sick days. There are other types of leaves of absences that are protected by the Ontario Employment Standards Act.

Workers' Compensation (WSIB):

When an employee is injured on the job, employers have specific obligations under the Workplace Safety and Insurance Board (WSIB).

Employers are required to report workplace injuries to the WSIB within 72 hours.
WSIB coverage is mandatory for the construction industry, with some exceptions for home renovation work.
Employers are responsible for providing first aid, reporting accidents, and maintaining incident records.
Failure to report injuries may result in penalties.
Employers must pay the injured worker’s full wages for the day of the injury.
If the employee is unable to work beyond the day of the accident, WSIB provides compensation payments, covering 85% of the employee’s take-home pay, up to a maximum insured wage.

Termination Notice:

When terminating an employee’s employment, employers must comply with provincial notice requirements.

Notice is required if an employee has been continuously employed for at least three months.
The required notice period varies based on the length of the employee’s employment.
For mass layoffs, involving a significant number of employees, longer notice periods are required.
During the statutory notice period, employers must:
- Maintain the employee’s wage rate and employment terms.
- Continue contributing to employee benefit plans.
- Pay the employee their regular wages.
Employers may provide termination pay in lieu of notice, which is a lump sum payment equivalent to the wages the employee would have earned during the notice period.

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