Payroll tax hike hits Ontarians earning $150K or more

Payroll tax hike hits Ontarians earning $150K+

Watch your paystubs closely

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Salaried workers in Ontario earning $150,000 a year or more may notice they’re taking home less pay starting this month.

The provincial Liberals introduced a one percentage point tax increase for employees earning between $150,000 and $220,000; and a two percentage point increase for those earning between $220,000 and $514,090 earlier this summer. Here’s the kicker: the tax hikes are retroactive to January 2014 meaning these first few months of increased payroll tax deductions will be most painful for high-income earners.

Most employees earning more than $150,000 will see a three percentage point or six percentage point increase in their Ontario taxes on regular pay from September to December, 2014. After that, deductions will drop to one and two percentage points as per the legislation. Some employers may take longer than others to implement the new payroll tax but sooner or later, all high-income earners will pay their share.

Below are the 2013 and 2014 Ontario tax rates and income thresholds for comparison.

2013 Ontario tax brackets


Annual taxable income ($) Provincial tax rate
0 to 40,120 5.05%
40,120 to 80,242 9.15%
80,242 to 514,090 11.16%
514,090 and over 13.16%

2014 Ontario tax brackets


Annual taxable income ($) Provincial tax rate
0 to 40,120 5.05%
40,120 to 80,242 9.15%
80,242 to 150,000 11.16%
150,000 to 220,000 12.16%
220,000 and over 13.16%

Check out CRA’s website for more information on this topic.

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