Ontario Provincial Tax and Benefit Framework for 2026
Updated on December 19, 2025, 10:32 AM EST (Toronto Time)
Ontario has officially unveiled its entire provincial tax and benefit structure for 2026. This includes new income tax brackets, marginal tax rates, surtaxes, non-refundable credits, refundable benefits, and income thresholds.
These changes will be implemented in two phases. The provincial income tax adjustments will be effective for the 2026 tax year starting on January 1, 2026.
Most refundable benefits, such as the Ontario Trillium Benefit, Ontario Child Benefit, and Ontario Guaranteed Annual Income System, will be applicable for the benefit year from July 1, 2026, to June 30, 2027.
This update comes as households are grappling with increased housing expenses, ongoing food inflation, higher energy costs, and persistent challenges related to childcare affordability.
Instead of introducing major reforms, the province is relying on inflation indexation, income-tested clawbacks, and targeted credits to maintain purchasing power while upholding fiscal responsibility.
Overview of Ontario’s 2026 Income Tax System
Ontario follows a progressive income tax system, where income is taxed in layers based on applicable marginal rates. Higher rates are applied only to income exceeding specific thresholds. After calculating basic provincial tax, surtaxes, tax reductions, and non-refundable credits are applied. Refundable credits and benefits are calculated separately and can be disbursed even if no tax is owed. This layered approach can lead to confusion, especially when taxpayers focus solely on headline rates.
Ontario Income Tax Brackets for 2026
- Up to $53,891
- Greater than $53,891 up to $107,785
- Greater than $107,785 up to $150,000
- Greater than $150,000 up to $220,000
- Greater than $220,000
Provincial Tax Rates for 2026
- First bracket: 5.05%
- Second bracket: 9.15%
- Third bracket: 11.16%
- Fourth bracket: 12.16%
- Fifth bracket: 13.16%
Ontario Two-Tier Surtax for 2026
Ontario applies surtaxes to basic provincial tax, not directly to income. This structure significantly increases tax liability for middle- and high-income earners, often overlooked when estimating take-home pay.
- First tier surtax rate: 20%
- Second tier surtax rate: 56%
Alternative Minimum Tax in Ontario for 2026
The Alternative Minimum Tax ensures that high-income individuals pay a minimum provincial tax, especially if deductions and preferential income sources lower regular tax obligations. This impacts individuals with significant capital gains, stock options, or complex tax planning.
- AMT rate: 24.63%
Non-Refundable Tax Credits for 2026
Non-refundable tax credits reduce provincial tax liability but cannot result in a refund.
