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Provincial tax

Ontario Business Tax Rates for 2026

Ontario business tax rates for 2026, with the small business rate cut to 2.2% on July 1, 13% HST, the Employer Health Tax and income brackets.

Sources checked October 20264 min read

One

Corporate tax rates in Ontario

Ontario cut its small business rate from 3.2% to 2.2% on July 1, 2026. With the federal 9%, a Canadian controlled private corporation now pays 11.2% on its first $500,000 of active business income. The general rate stays at 11.5%, or 26.5% with federal tax.

A corporation whose year runs across July 1 does not choose one rate. When a rate changes during the year, the CRA prorates by the number of days each rate was in force, so a company with a December year end pays a blend of the two on its 2026 small business income.

Ontario corporate tax has been collected by the CRA on the federal T2 since 2009, so there is one return for both governments.

Ontario corporate rates for 2026, with the federal 9% and 15% added. Source: Canada Revenue Agency.
Rate	Ontario	With federal tax
Small business rate on income earned before July 1, 2026	3.2%	12.2%
Small business rate after the change	2.2%	11.2%
General rate	11.5%	26.5%
Income the small business rate covers	$500,000	Same federal limit

Key points

11.2% combined on the first $500,000 of active business income, down from 12.2% on income earned before July 1, 2026
26.5% combined general corporate rate
13% HST on one return filed with the CRA
Employer Health Tax on Ontario payroll above $1,000,000 for eligible employers

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Two

Sales tax in Ontario

Ontario harmonized in 2010, so its 13% HST is one tax on one return: 5% federal and 8% provincial, filed with the CRA, with input tax credits for the full 13% paid on business purchases.

Registration follows the federal small supplier rule: once taxable sales pass $30,000 over four consecutive calendar quarters, the business registers and starts charging HST.

Three

Ontario income tax brackets for 2026

Five brackets run from 5.05% to 13.16% on income above $220,000. Those rates understate Ontario tax at higher incomes, because two more charges sit on top: a surtax once basic Ontario tax passes set thresholds, and the Ontario Health Premium of up to $900 a year.

Both are calculated on the Ontario part of the personal return and both are withheld through payroll, which is why an Ontario employee's deductions look higher than the brackets alone suggest.

Ontario income tax brackets for 2026. Federal tax is charged as well. Source: Canada Revenue Agency.
Taxable income from	Up to	Rate
$0	$53,891	5.05%
$53,891.01	$107,785	9.15%
$107,785.01	$150,000	11.16%
$150,000.01	$220,000	12.16%
$220,000.01	No upper limit	13.16%

Four

Payroll costs in Ontario

Ontario's Employer Health Tax is charged on total Ontario remuneration. Employers whose Ontario payroll is not more than $5,000,000 are exempt on the first $1,000,000.

The rate is set by payroll before the exemption comes off: 0.98% for payroll up to $200,000, rising in steps to 1.95% once payroll passes $400,000. An eligible employer with $1,300,000 of payroll pays 1.95% on $300,000, which is $5,850.

Workplace insurance runs through the WSIB, and whether coverage is compulsory depends on the industry.

Five

How Ontario files

One return covers federal and Ontario corporate tax, and one covers HST, both with the CRA. The Employer Health Tax is the exception: Ontario's Ministry of Finance administers it, with monthly instalments once payroll passes $1,200,000 and an annual return.

Six

Ontario questions, answered

What is Ontario's small business tax rate in 2026?

2.2% from July 1, 2026, down from 3.2%. With federal tax that is 11.2% on the first $500,000 of active business income.

Does a corporation with a December year end pay the old rate or the new one for 2026?

Both. The year's small business income is split by the number of days before and after July 1, 2026, and each part is taxed at the rate in force for those days.

Who pays the Employer Health Tax?

Employers with Ontario payroll. Eligible employers pay nothing on the first $1,000,000, and employers with more than $5,000,000 of payroll get no exemption.

Seven

More for Ontario businesses

Official sources

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Important. This article provides general educational information, not legal or tax advice for a specific business. Rules, administrative policies, rates and deadlines can change. Confirm your facts and current obligations with the responsible government agency and a qualified adviser.