In order to help maintain the country’s financial infrastructure, Canadian residents have to pay various taxes on the money they earn through gainful employment. If you’re trying to figure out your gross monthly income, it’s important to know that your federal and provincial tax rates can significantly affect that amount.
To understand the cost of your income taxes, you must learn how to calculate your annual salary properly. For instance, here’s how to calculate your net take-home salary in Ontario.
How To Calculate Your Net Salary In Ontario
Your gross salary is the total amount of income you get to take home yearly, before taxes, otherwise known as your annual pre-tax salary. To calculate your net salary, subtract your federal and provincial tax rates, as well as your tax deductions, from your gross annual pre-tax salary. Here’s a basic formula to estimate your net salary in Ontario:
| NET SALARY = GROSS SALARY – FEDERAL TAXES – PROVINCIAL TAXES – CPP – EI |
What Deductions Can Affect My Take-Home Pay In Ontario?
The Canada Pension Plan (CPP) and Employment Insurance (EI) are federal tax deductions that replace part of your income during specific events. The government subtracts them from your take-home pay, thus reducing your annual net salary.
Canada Pension Plan
The CPP (or QPP if you live in Quebec) is a contributory social assistance program that deducts a percentage of a taxpayer’s total take-home pay periodically throughout the year. That percentage is based on the taxpayer’s income and provides them with:
- A regular income following their retirement
- Disability benefits
- Death and survivor benefits
Employment Income
EI is a monthly tax deduction that offers temporary financial assistance (income) to Canadians who are forced to stop working for credible reasons, including:
- Serious injury or illness
- Caring for a family member with an eligible illness or injury
- Job loss (if you’re not responsible for said loss)
- Pregnancy or other parental benefits
Other Deductions That Can Affect Your Take-Home Pay In Ontario
Your taxable income can also be reduced by deducting these common costs:
- Professional expenses or union dues
- RRSP (Registered Retirement Savings Plan) contributions
- RPP (Registered Pension Plan) contributions through your employer
Tax Rates In Ontario
The amount you get taxed in Ontario depends on your annual pre-tax salary. Basically, the more money you make a year, the higher the tax brackets you can fall under. When calculating your salary, don’t forget to apply your federal and provincial tax rates, which are slightly different:
Federal Income Tax Brackets
| Federal Tax Rate | Federal Income Tax Brackets |
| 15% | Applicable to taxable income up to $55,867 |
| 20.5% | Applicable to taxable income over $55,867 up to $111,733 |
| 26% | Applicable to taxable income over $111,733 up to $173,205 |
| 29% | Applicable to taxable income over $173,205 up to $246,752 |
| 33% | Applicable to taxable income over $246,752 |
Ontario’s Provincial Income Tax Brackets
| Ontario Tax Rate | Ontario Income Tax Brackets |
| 5.05% | Applicable to taxable income up to $49,231 |
| 9.15% | Applicable to taxable income over $49,231 up to $98,463 |
| 11.16% | Applicable to taxable income over $98,463 up to $150,000 |
| 12.16% | Applicable to taxable income over $150,000 up to $220,000 |
| 13.16% | Applicable to taxable income over $220,000 |
How To Calculate Your Net Take Home Salary In Ontario?
If you have a gross income come $30,000 or $80,000, how much will you actually tax home after taxes? Below we’ve shown you how to calculate your take-home pay for both income levels.
| Gross income | $30,000 | $80,000 |
| What Provincial Tax Bracket Does Your Income Fall Under? | – 5.05% tax rate applicable to the first $46,226 of taxable income. | – 5.05% tax rate applicable to the first $46,226 of taxable income – 9.15% tax rate applicable to the next $92,454 of taxable income |
| What Federal Tax Bracket Does Your Income Fall Under? | – 15% tax rate applicable to the first $50,197 | – 15% tax rate applicable to the first $50,197 – 20.5% tax rate applicable to income over $50,197 to $100,392 |
| Provincial Tax Calculation | 5.05% x $30,0000 = $1,515 | 5.05% x $46,226 = $2,3349 15% x $33,774 = $3,090 |
| Federal Tax Calculation | 15% x $30,000 = $4,500 | 15% x $50,197 = $7,529 20.5% x $29,803 = $6,109 |
| Total Tax You Pay | $6,015 | $19,062 |
| Net Salary | $23,985 | $60,938 |
Note: This example shows the approximate net salary before EI and CPP deductions
Net Salary By Income In Ontario
When doing your taxes, remember that every province and territory has a different income tax rate. The table below showcases approximately how much income taxes, CPP contributions and EI contributions you’ll have to make depending on your income level.
| Salary | Federal Tax Deduction | Provincial Tax Deduction | CPP Deduction | EI Deduction | Net Pay |
| $30,000 | $4,500 | $1,515 | $1,511 | $474 | $22,000 |
| $60,000 | $8,721 | $3,984 | $3,221 | $948 | $43,126 |
| $100,000 | $16,878 | $8,655 | $3,500 | $953 | $70,014 |
| $150,000 | $29,857 | $17,360 | $3,500 | $953 | $98,331 |
What Ontario Tax Credits Can Affect Your Net Income?
The Ontario Government offers a variety of refundable and non-refundable tax credits, any of which can affect your net salary and/or the amount of income taxes you pay from year to year. These tax credits are specific to Ontario and are some of the more commonly used ones:
Ontario Trillium Benefit
For low-to-moderate income earners, the Ontario Trillium Benefit offers a tax-free payment to help pay energy costs, sales taxes and property taxes. You must apply yearly by submitting your personal Income Tax and Benefit Return, as well as a completed ON-BEN Application Form (included with your tax return). It also combines the following credits (you must qualify for at least 1 of 3 credits):
- Ontario Sales Tax Credit
- Northern Ontario Energy Credit
- Ontario Energy and Property Tax Credit
Ontario Tax Reduction
This credit lowers or cancels your yearly income taxes in Ontario. To qualify, you need to be a Canadian resident on January 1 and an Ontario resident on December 31 of that same tax year. You may claim this credit for each of your dependents, as long as they are not older than 18, or they have a physical or mental impairment. The level of reduction you can earn is based on:
- Your payable income tax for the year
- Your marital status (single, married or common-law partnership)
- The number of dependents living with you
- Where you were living at the start and finish of the current tax year
Community Food Program Donation Tax Credit For Farmers
Ontario farms and farming corporations can claim this credit (and the charitable donation tax credit) by donating locally made agricultural products to eligible community food programs. It can be claimed for donations made on or after January 1, 2014, and offers 25% of the fair market value for any donated items. Requirements include:
- Donating legally approved agricultural products, sourced in Ontario.
- Donating to an eligible public food distribution program in Ontario (that’s registered as a charity under Canada’s Income Tax Act).
- Being a corporation that operates as a farming business in Ontario.
- OR
- An individual (or their spouse/common-law partner) or sole proprietor of an Ontario farming business on December 31 of the present tax year.
Take-Home Pay Across Canada
- Calculate Your Take-Home Pay In Nova Scotia
- Calculate Your Take-Home Pay In PEI
- Calculate Your Take-Home Pay In Saskatchewan
- Calculate Your Take-Home Pay In Newfoundland and Labrador
- Calculate Your Take-Home Pay In Alberta
- Calculate Your Take-Home Pay In British Columbia
- Calculate Your Take-Home Pay In Ontario
What Is The Minimum Wage In Ontario?
In Ontario, the minimum wage fluctuates according to Canada’s Consumer Price Index for the previous year and figures are updated annually on October 1st. The province’s minimum wage is currently set at $15 per hour, which is equivalent to $30,000 yearly when you’re working at a standard full-time job (40 hours a week, 50 weeks a year).
Keep in mind that there are different wages for specific types of Ontario employees:
- $12.55 per hour for liquor servers
- $13.50 per hour for 18-year old residents who work 28 hours a week.
Average Salary In Ontario
According to Statistics Canada, the average income for Ontario residents who are age 16 or older was $52,600 (with a median income of $39,100) in 2020.
Take Home Pay FAQs
What’s the difference between your gross salary and net salary?
How much taxes will I pay if I make $60,000 per year in Ontario?
What’s the benefit of knowing your gross pay and net pay?
- Budget for large expenses and avoid future debt problems
- Negotiate for a higher salary when you apply for a new job
- Negotiate for a raise or change of position at your current job
- Compare different jobs and salaries online or in your region
Trying To Improve Your Salary In Ontario?
In that case, make sure you learn how to calculate it first, as there are a number of tax deductions and credits available in the province that could affect your gross take-home pay. This way, you can find out if you’re being paid fairly at work and whether or not it might be a time to ask for a raise, get a promotion or change careers altogether.
