Ontario Payroll Tax Calculator 2018

How Ontario Payroll Taxes Work

Ontario payroll taxes are deducted from employee wages and remitted to the government. The main components are:

• Employment Insurance (EI): A payroll tax that funds unemployment benefits
• Canada Pension Plan (CPP): A retirement savings program with employer and employee contributions
• Income Tax: Progressive tax rates applied to taxable income

The calculator accounts for all three deductions to show the net take-home pay.

2018 Ontario Tax Rates

The 2018 tax rates for Ontario payroll deductions were:

Employment Insurance (EI)

Employers pay 1.63% of insurable earnings, and employees pay 1.18%.

Canada Pension Plan (CPP)

Employers and employees each contribute 4.95% of pensionable earnings.

Ontario Income Tax

The progressive tax rates were:

• 15% on the first $43,906 of taxable income
• 28.5% on the next $43,903
• 33% on amounts over $87,809

Worked Examples

Example 1: $50,000 Annual Salary

For a $50,000 annual salary:

• EI: $1,630 (employer) + $1,180 (employee) = $2,810
• CPP: $2,475 (employer) + $2,475 (employee) = $4,950
• Income Tax: $5,831.50
• Total Deductions: $13,601.50
• Net Pay: $36,398.50

Example 2: $80,000 Annual Salary

For an $80,000 annual salary:

• EI: $3,260 (employer) + $2,360 (employee) = $5,620
• CPP: $3,960 (employer) + $3,960 (employee) = $7,920
• Income Tax: $16,708.50
• Total Deductions: $29,288.50
• Net Pay: $50,711.50