How Much $72000 After Tax in Ontario?

Tax Rates and Take-Home Pay

An individual earning $72,000 per year in Ontario would have the following income tax rates applied in 2024:

  • Federal tax rate: 20.5% on income between $50,197 and $100,392, plus 26% on income between $100,392 and $72,000
  • Ontario tax rate: 9.15% on income between $49,231 and $98,462

This results in an estimated total annual tax bill of $20,719, comprised of:

  • Federal taxes: $8,770
  • Provincial taxes: $4,346
  • CPP contributions: $3,754
  • EI premiums: $1,002

After these taxes and deductions, the take-home pay on a gross salary of $72,000 per year works out to approximately $51,281, or $4,273 per month.

The average total tax rate is 28.8% and the marginal tax rate is 32.7%. This means for every additional $100 earned, $32.70 goes to taxes and $67.30 is kept as take-home pay.

Deductions

In addition to federal and provincial income taxes, the key deductions from a $72,000 gross salary in Ontario are:

CPP Contributions

All working Canadians must contribute 5.70% of pensionable earnings to the Canada Pension Plan (CPP) in 2024, up to an upper limit of $64,900. For someone earning $72,000, the maximum CPP deduction is $3,754 annually or $313 per month.

EI Premiums

Employment Insurance (EI) premiums are deducted at a rate of 1.58% in 2024, applied to an upper limit of $60,300. For a $72,000 salary, the EI deduction would be $1,002 for the full year, or $84 monthly.

Additional Deductions

There may be additional payroll deductions such as group insurance premiums, union dues, charitable donations, etc. depending on your circumstances. On average these add up to a few hundred dollars annually.

Comparison to Other Provinces

Comparing Ontario's taxes to other major provinces:

  • Alberta has significantly lower average and marginal tax rates of 19.26% and 25.44% respectively on a $72,000 income. Take-home pay would be approximately $3,307 per month.
  • In British Columbia, average and marginal tax rates on $72,000 are 17.58% and 23.76%, resulting in take-home pay of around $3,408 monthly.
  • Quebec has higher tax rates than Ontario, with take-home pay on $72,000 being $3,241 per month after 23.5% average and 30.25% marginal rates.

So Ontario is moderately taxed compared to other large provinces, with Alberta being the most tax advantaged currently.

Is $72,000 a Good Salary?

Whether or not $72,000 represents a good salary depends greatly on your individual situation. However, some general observations in an Ontario context:

  • The average individual income in Ontario is approximately $54,450, so a salary of $72,000 is 32% higher than the provincial average.
  • $72,000 provides an after-tax monthly income of $4,273 which is quite comfortable for a single individual renting in many regions of Ontario. Saving and investing would be quite feasible on this salary.
  • For a household with kids however, $72,000 would represent a more modest middle-class lifestyle in high cost-of-living cities like Toronto or Ottawa. You may need to budget carefully to afford housing, childcare, transportation and other family expenses.
  • Someone earning $72,000 would be considered above the low income cut-off (LICO) threshold for all household sizes, meaning it provides income well above the poverty line.
  • That said, $72,000 does not confer high earnings or "rich" status by any means, particularly in Toronto where the average household income is $121,200. However, it does provide a solid middle class lifestyle with some financial flexibility.

Overall, while not an exceptionally high salary, $72,000 certainly represents a comfortable living in many parts of Ontario, with the ability to meet daily needs, save, and enjoy some discretionary spending. It exceeds average individual and household incomes by a fair margin. However, to afford a nice home, raise a family, and build substantial wealth in high cost-of-living cities, a higher income would be advisable over the long term.

Conclusion

In summary, a $72,000 annual salary after taxes provides around $4,273 per month in take-home pay for an Ontario resident, based on a 28.8% average tax rate. Key deductions encompass federal and provincial income taxes, CPP contributions, and EI premiums.

This salary is 32% higher than the province's average, conferring a comfortable lifestyle for individuals and possibly families depending on region and household size. While not enough to be considered "rich", $72,000 delivers an above-average salary with room for solid savings and discretionary expenditures. It exceeds low income thresholds by a significant degree.

Compared to other major provinces, Ontario is moderately taxed at this income level. Take-home pay lags behind Alberta but exceeds British Columbia and Quebec.

For individuals and households seeking to build wealth long-term in Ontario's largest cities, a higher salary would be recommended. However $72,000 still falls into the broad middle class income range - sufficient to meet daily needs and enjoy some financial flexibility.

Written By:
Salman Rundhawa
Salman Rundhawa is the founder of Filing Taxes. Salman provides valuable tax planning, accounting, and income tax preparation services in Toronto, Mississauga, Oakville, and Hamilton.

Leave a Reply

Your email address will not be published. Required fields are marked *

February 29, 2024
Tax Considerations for Social Media Influencers in Canada

In the ever-evolving world of social media, individuals have found new avenues to express their creativity, share their passions, and build thriving businesses. This paradigm shift has introduced new lucrative income streams available to a breed of professionals known as “influencers”. These may include Twitch or YouTube streamers earning advertisement revenue, performers receiving subscriptions, gifts, and […]

Read More
February 29, 2024
Difference Between Factual and Deemed Tax Residency in Canada & Tax Implications

Navigating the complex world of taxation in Canada can be challenging, especially when dealing with residency status and its implications on your tax obligations. If you’re a resident, you have to declare your worldwide income and pay taxes on it. If you’re a non-resident, you’re taxed only on your Canadian-sourced income. Therefore, it is essential […]

Read More
February 29, 2024
Guide to Independent Contractor Taxes in Canada- The Gig Economy

The rapidly expanding gig economy in Canada provides countless opportunities to work from the comfort of your home and perform other “gig jobs.” Independent contractors, freelancers, and gig workers are reshaping the traditional employment landscape, offering their skills and services on a project basis. Many Canadians are capitalizing on a boom in freelance positions and side […]

Read More
1 2 3 18
Contact Form Demo

This will close in 0 seconds

phone-handsetchevron-down Call Now linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram