Ontario Tax Updates 2025: Provincial Brackets and Credits

Ontario Income Tax Brackets for 2025

Ontario’s tax bracket thresholds increased for 2025 to account for inflation (Ontario uses the Ontario Consumer Price Index to index its tax system annually). The Ontario income tax rates themselves remain unchanged from 2024 – no new rate increases or cuts were announced for 2025. However, because the brackets expanded, taxpayers can earn more at the lower rates:

· 5.05% on the first $52,886 of taxable income (was $51,698 in the 2024 tax year; now higher)[40].

· 9.15% on income from $52,886 up to $105,775[40]. (This roughly doubles the first bracket – the second bracket threshold also rose from $103,000 range last year to $105,775.)

· 11.16% on income from $105,775 up to $150,000[41].

· 12.16% on income from $150,000 up to $220,000[42].

· 13.16% on income over $220,000[42] (this is Ontario’s top marginal rate, apart from surtax – see below).

These bracket thresholds align with a 1.6% provincial inflation factor (for example, the $150,000 and $220,000 cut-offs are fixed by policy and not indexed, but the lower brackets are indexed ~1.6-1.9%). The bottom line is that Ontario taxpayers will see slightly less provincial tax if their incomes grew only by inflation or less, because more of their income stays in the lower brackets than it would have without indexing.

Note on High-Income Surtax: Ontario imposes surtaxes on high provincial tax amounts, which effectively create additional “stealth” brackets. The surtax thresholds also increase with indexing. For 2025: - A 20% surtax applies once Ontario income tax exceeds ~$5,818, and a further 36% surtax above ~$7,446 of provincial tax[43]. In practical income terms, these surtax thresholds kick in roughly around $100k and $150k of income respectively (they move slightly each year). The surtax mechanism is unchanged, just the thresholds shift modestly. Most tax software will handle this automatically.

Health Premium: Ontario’s Health Premium (up to $900 for high-income earners) remains in effect with the same income thresholds, but those thresholds are not indexed (they are fixed). For instance, the top premium applies at $200,000+ income[44]. No changes were made to the premium for 2025.

Basic Personal Amount and Tax Credits (Ontario)

Ontario, like the federal government, provides a Basic Personal Amount (BPA) credit for all residents. This amount is the portion of income exempt from Ontario tax via a non-refundable credit at the lowest rate (5.05%). The Ontario BPA is indexed annually:

· The Ontario Basic Personal Amount for 2025 is approximately $12,747, up from $12,491 in 2024 (an increase of about 2.0%)[45]. (This figure is confirmed by tax authorities; e.g., TaxTips notes $12,747 for 2025 at 5.05% rate[45].) Every Ontario taxpayer can claim this, resulting in an Ontario tax reduction of about $12,747 * 5.05% ≈ $643 off their provincial tax.

· Other Ontario non-refundable credits (e.g., age, spouse, caregiver) also increased slightly:

· Age amount (65+): $6,223 for 2025 (for incomes up to ~$46,300, with partial credits up to ~$87,800)[46].

· Spouse/Equivalent to spouse amount: $10,823 max (reduced if dependant’s income > $1,082, zero at $11,905)[47][48].

· Infirm dependant amount: Continues with calculation via Ontario Caregiver amount (no major changes announced, just indexed thresholds).

· Disability amount (Ontario): $10,298 for 2025[49] (separate from the federal $10,138; Ontario’s credit is also at 5.05%).

· Ontario’s credits generally parallel federal definitions but with province-specific amounts. All these were indexed, as confirmed in the 2025 Ontario TD1 forms and CRA payroll tables.

Ontario Tax Reduction (OTR) and LIFT Credit:
Ontario has mechanisms to reduce or eliminate provincial tax for lower-income individuals: - The Ontario Tax Reduction is a basic credit that ensures no Ontario tax is payable on roughly the first ~$15,000 of income for most people, through a combination of the BPA and an additional reduction. In 2025, the OTR provides up to $294 of tax reduction for individuals (plus $575 for each dependent under 18)[50]. It is clawed back as income increases and fully disappears when Ontario tax before credits exceeds twice those amounts[51]. In practical terms, a single person pays no Ontario tax until around $19,000 of income[52]. - The Low-Income Individuals and Families (LIFT) Credit remains in place for 2025. LIFT is a refundable credit introduced in 2019 that can eliminate up to $850 of Ontario tax for low-income workers. It’s income-tested (approx. net income under $38,000 for full credit, phase-out until ~$68,000). The 2025 Ontario budget did not change LIFT’s parameters, so it continues as before[53]. If you earn near minimum wage, LIFT can effectively zero out your Ontario tax – be sure to file your return to claim it.

New Ontario Tax Credit: Fertility Treatment Credit

A major new provincial credit announced and implemented for 2025 is the Ontario Fertility Treatment Tax Credit:

· This is a new refundable tax credit starting in the 2025 tax year. It allows Ontario residents to claim 25% of eligible fertility treatment expenses, up to a maximum expense of $20,000 per year[54]. That means the credit can provide up to $5,000 back (25% of $20k) for those incurring fertility-related costs.

· What expenses qualify? Likely similar to those eligible for the federal Medical Expense Tax Credit or the existing federal IVF credit, such as in vitro fertilization costs, fertility drug costs, and certain related medical procedures. The Ontario government will define the specifics, but it’s geared to out-of-pocket costs for fertility treatments that are not otherwise covered.

· Who can claim: Families (including single individuals or couples) undergoing fertility treatments who are Ontario tax residents. Importantly, it’s refundable – meaning even if you don’t owe provincial tax, you can receive the credit as a refund. This ensures broad access, since fertility treatments are expensive and often those incurring them may have used other credits/deductions.

· Why this matters: This credit is significant – at 25%, it’s more generous than the standard 5.05% Ontario relief via the medical expense credit. It reflects a policy decision to support those facing infertility. If you or someone you know plans fertility procedures, 2025 is the year Ontario starts giving this extra assistance. Make sure to keep all receipts and documentation. You will claim the credit on your 2025 tax return (filed in spring 2026) for expenses paid in the 2025 calendar year, and you’ll get the refund even if you have little income.

· This measure was confirmed in the Ontario 2025 Budget (tabled May 2025) and is now law[54]. It complements an existing provincial program that directly funds one IVF cycle for eligible patients – now additional expenses can be partly claimed via the tax system.

Other Ontario Credits and Changes

· Ontario Staycation Credit: This was a temporary 2022 and 2022 extension credit to encourage local travel (20% of Ontario hotel expenses up to $1,000/$2,000). It was not extended to 2025. The credit expired after 2022 (with no indication of revival in 2024 or 2025 budgets), so it’s not available for the 2025 tax year.

· Childcare Access and Relief from Expenses (CARE) Tax Credit: Ontario’s CARE credit (a supplement to the federal childcare expense deduction) continues in 2025 unchanged. It allows families to claim a percentage of their childcare expenses (up to 75% for lower incomes). There were no new enhancements announced for 2025, so use it as in prior years if you have daycare or babysitting costs – it’s claimed when filing your return.

· Ontario Seniors Care at Home Credit: Introduced in 2022 (temporarily increased to 20% for 2022) and extended at 10% thereafter, this credit helps seniors with medical expenses not covered by other programs. In 2025, it remains available (10% of eligible expenses up to $6,000, i.e., $600 max, for low-to-moderate income seniors). No further changes were made for 2025.

· Property and Sales Tax Credits: The Ontario Trillium Benefit (which includes the Ontario Energy & Property Tax Credit and Ontario Sales Tax Credit) will see slight annual adjustments. For instance, the Ontario Sales Tax Credit component for the 2025–26 benefit year is indexed; low-income individuals will receive a bit more (the exact benefit depends on family size and income)[55]. These credits are delivered monthly if you qualify, once you file your return.

Summary and Action Items

For Ontario taxpayers, 2025 brings mostly inflationary adjustments plus a valuable new credit: - You’ll pay a touch less Ontario tax on the same income due to bracket indexing and a higher basic credit. - Ensure you file your return to benefit from low-income credits like OTR and LIFT if eligible – they can zero out your tax below certain income levels. - If you have significant fertility treatment expenses in 2025, claim the new Fertility Treatment Tax Credit – it’s refundable and could return up to $5,000 to you[54]. Consider timing procedures or payments in 2025 (or later) to take advantage of this credit, as it was not available in prior years. - Continue to claim existing credits (like medical, tuition, disability, caregiver, childcare) – all are still in place and generally a bit more generous due to indexing. For example, a qualifying senior’s caregiver could claim a slightly higher amount in 2025 than in 2024.

All changes discussed are drawn from official Ontario government announcements or statutes – no speculative items. The Ontario government confirmed no new personal income tax rate changes for 2025, focusing instead on targeted credits. Always refer to the forms (like the TD1ON for 2025 and the ON428 tax form) to double-check amounts when filing. If you use tax software, it will be updated with these new numbers.

Ontario’s updates, combined with federal changes, set the stage for our final topic: how to proactively plan and leverage these tax changes. In the next post, we’ll explore strategies to minimize tax and maximize benefits given everything we’ve covered in 2025’s federal and provincial updates.

Sources: CRA payroll indexing tables[40]; Ontario 2025 Budget Highlights[54]; Ontario and federal TD1 forms[56][48].