2025 Ontario Budget Highlights
On May 15, 2025, Peter Bethlenfalvy, Minister of Finance tabled the 2025-26 Ontario budget. We have highlighted selected tax proposals from the budget that affect individuals and small businesses in Ontario.
INDIVIDUALS
Personal Tax Rates
The budget did not contain any changes to Ontario personal income tax rates or the surtax rates. The Ontario surtax is a tax calculated on the base amount of Ontario tax. Ontario indexed the 2025 provincial tax brackets 2.8 per cent inflation.
| 2024 Taxable Income | 2025 Taxable Income | Tax Rate |
|---|---|---|
| $0 to $51,446 | $0 to $52,886 | 5.05% |
| $51,446 to $102,894 | $52,886 to $105,775 | 9.15% |
| $102,894 to $150,000 | $105,775 to $150,000 | 11.16% |
| $150,000 to $220,000 | $150,000 to $220,000 |
12.16% |
| Over $220,000 |
Over $220,000 | 13.16% |
Ontario Surtaxes
| 2024 Ontario Tax | 2024 Surtax Rate on Tax | 2025 Ontario Tax | 2025 Surtax Rate on Tax |
|---|---|---|---|
| $0 to $5,554 | No surtax | $0 to $5,554 | No surtax |
| $5,554 to $7,108 | 20% in excess of $5,554 | $5,554 to $7,108 | 20% in excess of $5,710 |
| Over $7,108 | 36% in excess of $7,108 + 20% of tax in excess of $5,554 |
Over $7,307 | 36% in excess of $7,307 + 20% of tax in excess of $5,710 |
Top Combined Ontario and Federal Rates - 2025
| Other/Interest/ Salary/Pension | Capital Gains | Eligible Canadian Dividends | Non-eligible Canadian Dividends |
|---|---|---|---|
| 53.53% | 26.76% | 39.34% | 47.74% |
Top rates apply to taxable income over $253,414 ($246,752 for 2024) based on known federal and provincial rates as of May 15, 2025
Personal Income Tax Measures
- The government is introducing legislation to make the temporary 5.7 cents per litre cut to the gasoline tax rate and 5.3 cents per litre to the fuel (diesel) tax rate permanent so that the rate of tax on gas and fuel would remain at 9 cents per litre.
- Removing road tolls for drivers from the provincially owned Highway 407 East.
- Implementing the Ontario Fertility Tax Credit, a refundable tax credit effective January 1, 2025 which provides support for 25% of eligible fertility treatment expenses up to $20,000 for a maximum credit of $5,000 per year.
Other Measures
- Creating the Protecting Ontario Account, a $5 billion fund designed to provide support for businesses with support to protect jobs for workers in strategic sectors of the economy that are facing tariff-related business disruptions.
- Continued promotion of local Ontario alcohol producers, including a 50% cut to the spirits basic tax rate at on-site distillery stores and 50% reduction of the microbrewer basic tax, as well as various cuts to LCBO mark-up rates for alcohol producers in Ontario.
BUSINESSES
The budget did not propose any changes to Ontario corporate tax rates or the $500,000 small business income (SBD) threshold.
Ontario Corporate Tax Rates
| Income Type | Provincial | Federal | Combined Calendar 2025 |
|---|---|---|---|
| General corporate income | 11.50% | 15.00% | 26.50% |
| Small business income | 3.20% | 9.00% | 12.20% |
| Small business income over the federal limit and under the Ontario limit | 3.20 | 15.00% | 18.20% |
| CCPC* investment income | 11.50% | 38.67% | 50.17% |
| Non-CCPC investment income | 11.50% | 15.00% | 26.50% |
| Manufacturing & processing income | 10.00% | 15.00% | 25.00% |
* Canadian-controlled private corporation
Based on known federal and provincial rates as of May 15, 2025.
Business Income Tax Measures
- Enhancing the Ontario Made Manufacturing investment tax credit, including temporarily increasing the tax credit rate for Canadian-controlled private corporations (CCPCs) from 10 percent to 15 per cent and temporarily expanding eligibility to a 15% non-refundable version of the credit to non-CCPCs.
- Deferral of select provincially administered taxes for six months from April 1, 2025 to October 1, 2025 to support business impacted by U.S. tariffs.
- The Workplace Safety and Insurance Board (WSIB) will provide a further $2 billion in rebates and insurance premium rate reductions to safe employers in 2025 in addition to the $2 billion in rebates issued in March 2025.
Refer to the 2025 Ontario Budget for further details.
This has been prepared by the Total Wealth Solutions Group of Raymond James Ltd., (RJL). Statistics and factual data and other information are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. It is for information purposes only and is not to be construed as an offer or solicitation for the sale or purchase of securities nor is it meant to replace legal, accounting, taxation or other professional advice. We are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax-related matters. The information is furnished on the basis and understanding that RJL is to be under no liability whatsoever in respect thereof. This is intended for distribution only in those jurisdictions where RJL and the author are registered. Securities-related products and services are offered through Raymond James Ltd., Member - Canadian Investor Protection Fund. Insurance products and services are offered through Raymond James Financial Planning Ltd., which is not a Member - Canadian Investor Protection Fund.