Who has to pay Ontario's provincial surtax?

Ontario's provincial surtax is an additional layer of tax applied on top of your basic Ontario personal income tax when your Ontario tax payable exceeds certain thresholds. There are two surtax rates: a lower rate applies once your Ontario tax exceeds a first threshold, and a higher additional rate applies once your Ontario tax exceeds a second, higher threshold. The result is a progressive increase in the effective tax rate for higher-income earners in Ontario.

The surtax thresholds are set by the Ontario government and adjusted periodically. Because the surtax is calculated on the amount of provincial tax owed (not directly on income), the income levels at which the surtax applies depend on your total income, deductions, and credits. Generally, the surtax begins to affect individuals with upper-middle to higher incomes.

The surtax is calculated on Form ON428 and is automatically included in your provincial tax payable when you use certified tax software or work through the manual calculation. Ontario's effective top combined marginal rate (federal plus Ontario, including surtax) is among the highest provincial rates in Canada. Tax planning strategies — including RRSP contributions, income splitting, and timing of capital gains — can help manage exposure to the surtax.