Ontario and Federal Tax Brackets 2018 Calculator

Understanding how income tax works in Canada requires knowing both federal and provincial tax brackets. This guide explains the 2018 tax brackets for Ontario and the federal government, how they combine to determine your total tax liability, and how to calculate your effective tax rate.

How the 2018 Tax Brackets Work

In Canada, income tax is calculated using a progressive tax system where different portions of your income are taxed at different rates. The federal government sets the basic tax brackets, while each province (including Ontario) sets its own provincial tax rates.

When calculating your total tax liability, you first determine how much tax you owe to the federal government based on your income and the federal tax brackets. Then you calculate your provincial tax (in this case, Ontario tax) using your income and Ontario's tax brackets. The two amounts are then added together to get your total tax liability.

Total Tax Liability Formula

Total Tax = Federal Tax + Ontario Tax

Where:

Federal Tax = Income × Federal Tax Rate
Ontario Tax = Income × Ontario Tax Rate

Your effective tax rate is calculated by dividing your total tax liability by your total income. This gives you a percentage that represents how much of your income is going to taxes.

Federal Income Tax Brackets 2018

The federal government uses the following tax brackets for 2018:

Taxable Income	Tax Rate
$0 - $12,071	15%
$12,071 - $47,630	20.5%
$47,630 - $95,259	26%
$95,259 - $147,667	29%
$147,667 - $210,371	33%
$210,371+	35%

The federal government also has a basic personal amount (BPA) of $12,071 for 2018. This amount is not taxed, so it's subtracted from your income before calculating federal tax.

Ontario Provincial Tax Brackets 2018

Ontario uses the following provincial tax brackets for 2018:

Taxable Income	Tax Rate
$0 - $44,740	5.05%
$44,740 - $89,482	9.15%
$89,482 - $150,000	11.16%
$150,000 - $220,000	12.16%
$220,000+	13.16%

Ontario also has a basic personal amount (BPA) of $11,474 for 2018. This amount is not taxed, so it's subtracted from your income before calculating Ontario tax.

Combined Federal and Ontario Tax Rates

When you combine the federal and Ontario tax brackets, you get an effective tax rate that represents the total tax you'll pay on your income. The combined tax rates for 2018 are as follows:

Taxable Income	Combined Rate
$0 - $12,071	15.05%
$12,071 - $44,740	20.10%
$44,740 - $47,630	25.20%
$47,630 - $89,482	29.65%
$89,482 - $95,259	37.16%
$95,259 - $147,667	40.16%
$147,667 - $150,000	42.32%
$150,000 - $210,371	45.32%
$210,371 - $220,000	46.32%
$220,000+	48.32%

These combined rates show how your total tax liability increases as your income grows. For example, someone earning $50,000 would pay about 29.65% in total taxes, while someone earning $200,000 would pay about 46.32%.

Worked Examples

Example 1: $40,000 Income

Let's calculate the taxes for someone earning $40,000 in 2018.

Federal Tax Calculation

Taxable Income = $40,000 - $12,071 = $27,929

First Bracket: $12,071 × 15% = $1,810.65

Second Bracket: $27,929 - $12,071 = $15,858 × 20.5% = $3,253.79

Total Federal Tax = $1,810.65 + $3,253.79 = $5,064.44

Ontario Tax Calculation

Taxable Income = $40,000 - $11,474 = $28,526

First Bracket: $28,526 × 5.05% = $1,434.83

Total Ontario Tax = $1,434.83

Total Tax = $5,064.44 (Federal) + $1,434.83 (Ontario) = $6,499.27

Effective Tax Rate = ($6,499.27 / $40,000) × 100 = 16.25%

Example 2: $100,000 Income

Now let's calculate the taxes for someone earning $100,000 in 2018.

Federal Tax Calculation

Taxable Income = $100,000 - $12,071 = $87,929

First Bracket: $12,071 × 15% = $1,810.65

Second Bracket: $35,559 × 20.5% = $7,277.54

Third Bracket: $40,258 × 26% = $10,472.28

Total Federal Tax = $1,810.65 + $7,277.54 + $10,472.28 = $19,560.47

Ontario Tax Calculation

Taxable Income = $100,000 - $11,474 = $88,526

First Bracket: $44,740 × 5.05% = $2,259.87

Second Bracket: $43,786 × 9.15% = $3,983.56

Total Ontario Tax = $2,259.87 + $3,983.56 = $6,243.43

Total Tax = $19,560.47 (Federal) + $6,243.43 (Ontario) = $25,803.90

Effective Tax Rate = ($25,803.90 / $100,000) × 100 = 25.80%

Frequently Asked Questions

How do I calculate my total tax liability using these brackets?

To calculate your total tax liability, first subtract the federal basic personal amount ($12,071) and the Ontario basic personal amount ($11,474) from your total income. Then apply the federal tax brackets to the remaining amount to calculate federal tax. Apply the Ontario tax brackets to the same remaining amount to calculate Ontario tax. Add the two amounts together to get your total tax liability.

What is the difference between marginal and average tax rates?

The marginal tax rate is the rate that applies to the last dollar of your income. The average tax rate is your total tax liability divided by your total income. For example, if you earn $50,000 and pay $12,500 in taxes, your average tax rate is 25%, while your marginal tax rate would be 29.65% based on the combined brackets table.

Are there any deductions or credits that can reduce my tax liability?

Yes, there are many deductions and credits available that can reduce your tax liability. Common deductions include those for RRSP contributions, medical expenses, and tuition. Credits like the Canada Child Benefit and the Canada Pension Plan contribution can also reduce your tax liability. These are not included in this calculator but should be considered when filing your taxes.

How do I find out if my income falls into a specific tax bracket?

You can use the calculator on this page to determine which tax brackets your income falls into. Simply enter your total income, and the calculator will show you the applicable federal and Ontario tax rates. You can also refer to the tax bracket tables in the guide section of this page.