Tax Rates on $85,000 in Ontario
An individual earning $85,000 per year in Ontario would fall into the 31.48% marginal tax bracket for 2023. This means every additional dollar earned above $85,094 is taxed at 31.48% [1].
The total income taxes paid on an $85,000 salary in Ontario are estimated to be $24,797, which includes:
- Federal tax: $16,043
- Provincial tax: $8,754
This results in an average tax rate of 29.2% and a marginal tax rate of 31.5% on the $85,000 salary.
After deducting total taxes of $24,797, the annual net take-home pay would be $60,203, which equates to $5,017 per month[1].
Deductions from $85,000 Gross Pay
In addition to federal and provincial income taxes, there are other deductions that come off an $85,000 gross salary in Ontario:
- Canada Pension Plan (CPP): $3,428
- Employment Insurance (EI) premiums: $743
- Employer health tax: $600 (estimated)
The CPP contribution is 5.70% in 2023 on earnings up to $64,900. The EI premium is 1.58% on earnings up to $60,300[2].
Any additional deductions would depend on the individual's situation, such as any optional employee benefits, RRSP contributions, support payments, etc.
Take-Home Pay Comparison to Other Provinces
Ontario has one of the higher overall tax burdens in Canada. By comparison, the take-home pay on an $85,000 salary in some other provinces is[1]:
- Alberta: $58,690 per year ($4,891 per month)
- British Columbia: $59,859 per year ($4,988 per month)
- Quebec: $57,548 per year ($4,796 per month)
So Ontario residents tend to take home $200 to $500 less per month compared to those provinces from an $85,000 gross salary after accounting for differences in provincial taxes.
Is $85,000 Considered a Good Salary in Ontario?
The median household income in Ontario is $79,500 as of 2020[3]. So an $85,000 individual income would be considered quite good relative to typical incomes in the province.
That said, the cost of living in cities like Toronto can be high, so context matters. For a single individual with no children, $85,000 provides a comfortable middle-class lifestyle. But for larger households, expenses add up quickly in Ontario, making it more of an average salary.
As a rule of thumb, here are some perspectives on what an $85,000 household income affords in Ontario:
- Can afford a decent 2-bedroom apartment or rental in many areas, but owning a house would still be difficult without a second income or existing equity
- Allows for occasional vacations, nights out, entertainment, etc. but not frequent excessive spending
- Saving for retirement is feasible alongside current spending
- Can support a family but not considered wealthy, upper-middle income range
So in summary, $85,000 goes fairly far as a single income, but those with families may still need to budget carefully depending on their situation.
Key Takeaways
- Someone earning $85,000 per year in Ontario has total income taxes of $24,797 deducted, leaving net take-home pay of $60,203 or $5,017 per month
- Additional deductions like CPP and EI premiums further reduce take-home pay
- Ontario has higher taxes compared to western provinces like Alberta and BC
- $85,000 represents a well above-average salary compared to median incomes
- It provides a comfortable middle-class lifestyle, but is not considered wealthy, especially for larger households
Whether $85,000 is “good money” depends entirely on individual circumstances and costs of living. But objectively speaking, it places a single earner safely within the upper-middle class by Ontario standards.