Combined federal and Ontario rates.
Federal and Ontario combined rates for Ontario residents. The federal lowest tax rate was reduced from 15% to 14% effective July 1, 2025, resulting in a blended rate of approximately 14.5% for 2025 filers.
| Taxable Income | Other Income | Capital Gains | Eligible Div. | Non-Elig. Div. | Cumul. Tax1 | Avg. Rate |
|---|---|---|---|---|---|---|
| First $52,886 | 19.55% | 9.78% | −7.55% | 8.66% | $7,357 | 13.91% |
| $52,886 – $57,375 | 23.65% | 11.83% | −1.89% | 13.38% | $8,418 | 14.67% |
| $57,375 – $93,132 | 29.65% | 14.83% | 6.39% | 20.28% | $19,020 | 20.42% |
| $93,132 – $105,775 | 31.48% | 15.74% | 8.92% | 22.38% | $23,000 | 21.74% |
| $105,775 – $109,727 | 33.89% | 16.95% | 12.24% | 25.16% | $24,340 | 22.18% |
| $109,727 – $114,750 | 37.91% | 18.95% | 17.79% | 29.78% | $26,244 | 22.87% |
| $114,750 – $150,000 | 43.41% | 21.70% | 25.38% | 36.10% | $41,546 | 27.70% |
| $150,000 – $177,882 | 44.97% | 22.48% | 27.53% | 37.90% | $54,667 | 30.73% |
| $177,882 – $220,000 | 48.28% | 24.14% | 32.10% | 41.71% | $74,871 | 34.03% |
| $220,000 – $253,414 | 49.84% | 24.92% | 34.25% | 43.50% | $92,757 | 36.60% |
| Over $253,414 | 53.53% | 26.76% | 39.34% | 47.74% | — | — |
1 Cumulative tax on other income at top of each bracket (basic personal amounts only). Capital gains rate = 50% inclusion × marginal rate. Rates include Ontario surtax effects. The federal lowest bracket rate was reduced from 15% to 14% effective July 1, 2025 (blended ~14.5% for 2025).
Combined federal and Ontario rates for Canadian-controlled private corporations (CCPCs). The small business deduction applies to the first $500,000 of active business income, subject to passive income grind and association rules.
| Income Type | Combined Rate | Notes |
|---|---|---|
| Active business — SBD | 12.2% | First $500K active business income |
| Active business — General | 26.5% | Above SBD limit or non-CCPC |
| Investment income (CCPC) | 50.17% | Includes refundable portion (30.67% RDTOH) |
| Capital gains (CCPC) | 25.09% | 50% inclusion × 50.17% |
| Threshold | Limit | Effect |
|---|---|---|
| Taxable capital | $10M – $50M | Business limit reduced proportionally |
| Passive income (AAII) | > $50,000 | Business limit reduced by $5 for every $1 above $50K |
| Full SBD elimination | $150,000 AAII | Business limit reduced to $0 |
Inter vivos trusts — including family trusts used in estate freezes — are taxed at the top marginal rate on all income. Graduated Rate Estates (GREs) and Qualified Disability Trusts (QDTs) are the only exceptions.
| Trust Type | Tax Rate | Notes |
|---|---|---|
| Inter vivos (family trust) | 53.53% | Top combined rate on all income |
| Testamentary (non-GRE) | 53.53% | Top combined rate on all income |
| Graduated Rate Estate | 19.55% – 53.53% | Graduated brackets; first 36 months after death only |
| Qualified Disability Trust | 19.55% – 53.53% | Graduated brackets; one QDT per beneficiary |
Income distributed to beneficiaries is taxed in their hands at their personal rates, not at the trust level. This is the primary planning strategy for family trusts.
The LCGE shelters gains on qualifying small business corporation shares and farm/fishing property from personal tax. For 2025, the exemption remains at the increased $1,250,000 level (indexation resumes in 2026).
| Exemption | 2025 Amount | Details |
|---|---|---|
| LCGE (QSBC shares) | $1,250,000 | Indexed to inflation (resumes 2026) |
| LCGE (farm / fishing property) | $1,250,000 | Same amount |
| Inclusion rate | 50% | On gains exceeding LCGE |
| Tax saved per $1M gain | ~$267,650 | At top marginal rate (53.53%) |
The Canadian Entrepreneurs' Incentive (CEI) was proposed in Budget 2024 but was never enacted into law. Budget 2025 (November 4, 2025) confirmed its elimination.
Key personal amounts, contribution limits, and thresholds for 2025. These affect salary vs. dividend planning, RRSP room, and effective tax rates.
| Item | 2025 Amount | Notes |
|---|---|---|
| Federal basic personal amount | $16,129 | Reduced for income above $177,882 |
| Ontario basic personal amount | $12,747 | Non-refundable provincial credit |
| RRSP contribution limit | $32,490 | Or 18% of prior-year earned income |
| TFSA annual limit | $7,000 | Cumulative room: $102,000 (since 2009) |
| CPP pensionable earnings (YMPE) | $71,300 | Basic exemption: $3,500 |
| CPP2 earnings ceiling (YAMPE) | $81,200 | Enhanced CPP on earnings between YMPE and YAMPE |
| Max employee CPP contribution | $4,034 | Base CPP (5.95%); plus $396 CPP2 (4%) |
| FHSA annual limit | $8,000 | Lifetime limit: $40,000; deductible contribution |
RRSP room is generated by salary, not dividends. This is a key factor in the salary vs. dividend decision.
Net after-tax cash from $1,000 of corporate pre-tax income, assuming the top Ontario marginal bracket. Results depend on individual circumstances — this comparison illustrates the integration concept for planning purposes.
Integration is approximate. Salary generates RRSP room and CPP benefits; dividends do not. Consult your advisor to determine the optimal mix for your situation.
After-tax returns at the top Ontario marginal bracket. To achieve the same after-tax return as interest income, you need a lower pre-tax yield from dividends or capital gains due to preferential tax treatment.
| Interest Rate | After-Tax Interest | Equiv. Eligible Div. | Equiv. Non-Elig. Div. | Equiv. Capital Gain |
|---|---|---|---|---|
| 3.00% | 1.39% | 2.30% | 2.67% | 1.90% |
| 4.00% | 1.86% | 3.06% | 3.56% | 2.54% |
| 5.00% | 2.32% | 3.83% | 4.45% | 3.17% |
| 7.00% | 3.25% | 5.36% | 6.22% | 4.44% |
| 10.00% | 4.65% | 7.66% | 8.89% | 6.34% |
After-tax interest = rate × (1 − 53.53%). Equivalent yields show the pre-tax dividend or capital gain rate needed to match the same after-tax return.
| Threshold | Value | Relevance |
|---|---|---|
| OAS clawback begins | ~$93,454 | 15% recovery tax on net income above threshold |
| TOSI age threshold | Age 18+ | Split income taxed at top rate if tests not met |
| 21-year deemed disposition | Trust property | Triggers capital gain; plan freeze before anniversary |
| Section 85 election deadline | Filing due date | Late-filed election subject to penalty |
| CRA prescribed rate | 3.5% avg. (Q1–Q2: 4%, Q3–Q4: 3%) | Minimum interest on income-splitting loans |
| AAII passive income grind | > $50,000 | Business limit reduced by $5 for every $1 above $50K |
Often called "probate fees," this tax applies when an estate certificate is issued by the Ontario Superior Court. It is one of the key motivations for estate freezes and other planning strategies that reduce the value of assets passing through the estate.
| Estate Value | Tax Rate | Notes |
|---|---|---|
| First $50,000 | $0 | No tax on the first $50,000 |
| Above $50,000 | $15 per $1,000 | 1.5% of estate value above $50,000 |
Assets held jointly, insurance proceeds paid to a named beneficiary, and assets held in a trust generally bypass probate. On a $5M estate, the tax is approximately $74,250.
Disclaimer: This page is for general information only and does not constitute tax, legal, or financial advice. Rates are combined federal and Ontario for 2025 and may change. Indexed amounts are approximate. Consult a qualified tax professional before making planning decisions. For current CRA prescribed rates, visit the Prescribed Rates page.
Last updated: March 29, 2026
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