A common question we hear is: how much tax is deducted from a paycheck? In Ontario, there is no single flat percentage that applies to everyone. The amount withheld depends on your earnings, your pay frequency, the information on your TD1 forms, and whether your pay includes bonuses or taxable benefits. Employers calculate deductions using CRA payroll tables or the CRA Payroll Deductions Online Calculator.
What does your paystub say
It also helps to clarify what people usually mean by “tax.” On a typical pay stub, the amount coming off your pay may include federal income tax, Ontario income tax, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums. So when employees say “tax deducted,” they are often referring to all mandatory payroll deductions, not just income tax.
Payroll
For 2026, payroll withholding in Ontario is governed by both federal and provincial rules. The CRA’s federal payroll guide shows the lowest federal tax bracket at 14% for income under $58,523, but that does not mean everyone has 14% deducted from every dollar on every paycheque. Payroll withholding is based on tables that take into account your pay period and claim code, so the actual amount withheld can differ significantly from a simple headline tax rate.
Personal tax credits return (TD 1)
Your TD1 forms matter more than many people realize. The CRA uses the total personal amount claimed on the federal TD1 and the Ontario TD1ON to determine the payroll withholding claim code. In Ontario, employees claiming more than the basic personal amount use the provincial TD1ON, and the Ontario non-refundable basic personal tax credit for 2026 is $12,989. In practical terms, the more accurately your TD1 reflects your situation, the more likely your source deductions will be reasonably aligned with your year-end return. (Learn more about tax credits)
CPP and EI
CPP and EI are also part of the picture. For 2026, the employee CPP contribution rate is 5.95% on pensionable earnings above the $3,500 basic exemption, up to the annual maximum pensionable earnings of $74,600. EI premiums for employees outside Quebec are 1.63% on insurable earnings up to $68,900. Once you reach the annual maximums, those deductions generally stop for the rest of the year with that employer. Higher earners may also see CPP2 contributions on earnings above the annual maximum pensionable earnings.
Tax credit for personal tax filing
This is why two employees with similar salaries can still have different deductions. One person may have claimed different credits on their TD1, been paid biweekly instead of semimonthly, received taxable benefits, or worked multiple jobs. CRA payroll tables specifically instruct employers to calculate withholding based on the employee’s taxable income for the pay period and the applicable claim code.
Another important point: the amount deducted from your paycheck is not always the same as the final tax you owe for the year. Payroll withholding is an estimate based on the information available during the year. When you prepare your return, your final result may change because of deductions, credits, multiple income sources, or changes in your circumstances that were not fully reflected in payroll.
Here are some examples to understand
Example 1: Person earning $50,000 per year
At $50,000 of employment income, the estimated annual income tax is about $6,362. CPP is about $2,766.75, and EI is about $815.00, so total payroll deductions are about $9,943.64. That leaves estimated take-home pay of about $40,056.36 per year, or about $3,338 per month before any other deductions such as benefits or pension plans. At this income, the Ontario health premium reaches $600.
Example 2: Person earning $120,000 per year
At $120,000 of employment income, the estimated annual income tax is about $27,214.42. CPP is about $4,646.45, including CPP2, and EI is $1,123.07, so total payroll deductions are about $32,983.94. That leaves estimated take-home pay of about $87,016.06 per year, or about $7,251 per month before any other deductions. At this income, the Ontario health premium is $750, and the Ontario surtax also applies.
Note: These are illustrative estimates only. Actual tax deducted from a paycheck may differ depending on pay frequency, taxable benefits, bonuses, multiple jobs, additional TD1 claims, RRSP contributions, and other deductions or credits.
So, how much tax is deducted from a paycheck in Ontario? The honest answer is that it varies from one employee to another, and from one pay period to the next. What matters most is whether the deductions are being calculated correctly based on your earnings and your tax credit forms. If you are unsure whether too much or too little was withheld, it is worth reviewing your pay stubs, T4 slip, and TD1 information before you file personal taxes in Ontario.
At IH CPA, we help individuals understand what is being deducted from their pay, what it means at year-end, and whether their tax position is tracking as it should.