Tax Rates and Take Home Pay
An individual earning $75,000 annually in Ontario would have the following tax rates applied:
- Federal tax rate:
- 15% on the first $53,359
- 20.5% on the next $21,641
- Ontario provincial tax rate:
- 5.05% on the first $49,231
- 9.15% on the next $25,769
Based on these tax brackets, the total annual taxes owed would be:
- Federal taxes:
- $8,004 (15% of $53,359)
- $4,436 (20.5% of $21,641)
- Total federal tax = $12,440
- Ontario provincial taxes:
- $2,486 (5.05% of $49,231)
- $2,358 (9.15% of $25,769)
- Total provincial tax = $4,844
- Total annual taxes = $17,284
This means the annual net take home pay after tax would be $75,000 - $17,284 = $57,716, which equals $4,810 per month.
The average total tax rate is 23% ($17,284 total tax / $75,000 income) and the marginal tax rate is 29.65% (highest bracket).
Deductions
The major tax deductions that would apply to a $75,000 salary in Ontario include:
- Canada Pension Plan (CPP) contributions: $3,754
- Employment Insurance (EI) premiums: $1,002
- Additional registered pension plan, union dues, etc if applicable
These deductions are taken directly off the gross pay, in addition to federal and provincial income taxes.
Comparison to Other Provinces
Comparing to other provinces, Ontario has higher overall taxes than Alberta, Saskatchewan, Manitoba but lower than many eastern provinces. For example, on a $75,000 income:
- Total tax in Alberta would be $19,097, net income of $55,903
- Total tax in Quebec would be $22,725, net income of $52,275
So Ontario is in the middle - higher taxes than some western provinces but lower than provinces like Quebec.
Evaluation of $75,000 Income
Overall, $75,000 per year, with a take home pay of $4,810 per month ($57,716 annually) is considered a very comfortable salary in Ontario. It is significantly higher than the average individual income of around $55,400 in Toronto, and $64,500 in Ottawa.
Some key points:
- Allows for comfortable lifestyle, ability to own a home, support family
- Puts household in 70th income percentile in Ontario
- Marginal tax rate of near 30% is quite high
So in summary, $75,000 after tax in Ontario provides a top 30% income that affords a very comfortable, middle-class lifestyle. But taxes could be lower compared to some other provinces.