What it includes
- Federal brackets for 2026, starting at 14% on the first $58,523, and the federal basic personal amount of up to $16,452 (it phases down above $181,440). 2027 thresholds are indexed by a projected 2.6% until the CRA publishes them; see 2027 brackets and payroll rates.
- Ontario brackets for 2026, the Ontario basic personal amount of $12,989, the Ontario surtax (20% of Ontario tax above $5,818, plus 36% above $7,446) and the Ontario Health Premium.
- CPP at 5.95% between $3,500 and $74,600 (5.75% from 2027, after the base-rate cut in Bill C-30), CPP2 at 4%, and EI at 1.63% up to $68,900 (1.64% up to $70,800 in 2027), with the matching credits and the deduction for enhanced CPP.
- The federal Canada employment amount of up to $1,501.
It leaves out credits and deductions that depend on your personal situation, such as RRSP contributions, childcare, medical expenses, donations, the Ontario low-income tax reduction and pension adjustments.
Marginal vs average rate
- Marginal tax rate
- Your marginal rate is the tax on your next dollar of income. Your average rate is total tax divided by total income. Decisions about raises, bonuses and RRSP contributions turn on the marginal rate.
For an incorporated owner the bigger question is how to pay yourself. The salary vs dividend calculator compares the two on the same pre-tax profit.
Questions
Is this my exact tax?
No. It is a close estimate for employment income using 2026 or 2027 rates. Your return will differ if you have other income, RRSP contributions, other credits, or payroll deductions that were withheld at a different rate.
Why is the Ontario surtax included?
Ontario charges a surtax on its own tax above set thresholds, which is why Ontario's top combined rate reaches 53.53% on income above $258,482. Most free calculators that skip it understate tax for higher incomes.
Does it work for self-employed income?
Not this one. Self-employed people pay both halves of CPP and no EI. The should I incorporate calculator handles sole-proprietor income.
Estimates use 2026 and 2027 federal and Ontario rates for individuals and Canadian-controlled private corporations. 2027 figures marked projected are our calculation until the CRA publishes them, and are for illustration only. They leave out many personal credits, deductions and elections. Talk to a CPA before acting on compensation, incorporation or tax decisions.