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Ontario Dividend Tax Credit Rates 2026

Calculate the effective tax rate on eligible and non-eligible Canadian dividends in Ontario, including the federal and Ontario provincial dividend tax credit for 2026.

Your Information

Employment, RRSP withdrawals, etc. (before adding dividends)

$

From Canadian public corporations (T5 box 24)

$

From CCPCs and private companies (T5 box 10)

$

Your effective tax rate on dividends is 6.39% — significantly lower than equivalent salary income due to the dividend tax credit.

Effective Rate

6.39%

on dividend income

Total Net Tax

$639

after dividend tax credits

Total Dividend Tax Credit

$3,453

fed $2,073 + prov $1,380

Net After-Tax

$9,361

dividends kept after tax

Dividend Tax Breakdown

Eligible dividends received$10,000
Grossed up ×1.38 (38% gross-up)$13,800
Federal tax on grossed-up dividends$2,829
Less federal dividend tax credit+$2,073
Provincial tax on grossed-up dividends$1,263
Less provincial dividend tax credit+$1,380
Total net tax on dividends$639
Net after-tax dividends$9,361
Effective tax rate on dividends6.39%

Ontario Dividend Tax Credit Rates & Examples

Ontario's 2026 provincial dividend tax credit for eligible dividends is 10.0% of the grossed-up amount. For a $10,000 eligible dividend, the gross-up adds $3,800 (38%), making the taxable amount $13,800. The Ontario DTC is $1,380 (10.0% × $13,800), which is subtracted from your Ontario provincial tax on that income. The federal DTC adds another $2,073 (15.0198% × $13,800). Together, these credits reduce the effective tax rate on eligible dividends to well below the rate on the same amount of employment income.

For non-eligible dividends, Ontario provides a provincial DTC of approximately 2.9863% of the grossed-up amount. With a 15% gross-up, a $10,000 non-eligible dividend becomes $11,500 taxable. The Ontario DTC is approximately $344, and the federal DTC is $1,038 (9.0301% × $11,500). The effective rate on non-eligible dividends is higher than on eligible dividends but still benefits from partial credit offset.

Ontario's surtax (20% on provincial tax above $5,659, plus 36% above $7,243) complicates the picture for higher-income investors. The surtax applies to your total provincial tax — including tax on grossed-up dividend income — before the DTC is applied. This effectively increases the marginal provincial rate on dividends for Ontario residents in the surtax zone, making the true effective rate on dividends higher than the base bracket rate would suggest.

Frequently Asked Questions

What is Ontario's dividend tax credit rate for eligible dividends in 2026?
Ontario's provincial dividend tax credit for eligible dividends is 10.0% of the grossed-up amount (the actual dividend × 1.38). Combined with the federal DTC of 15.0198%, Ontario residents receive a total credit that significantly reduces the effective tax rate on eligible dividends — often to below 40% of the rate on equivalent employment income.
How does the Ontario surtax affect dividend income?
Ontario's surtax (20% on provincial tax above $5,659, plus 36% above $7,243) applies to your total Ontario provincial tax, including tax on grossed-up dividend income. For higher-income investors, this surtax increases the effective provincial rate on dividends beyond the bracket rate alone, making the true marginal rate on eligible dividends approximately 25–30% at top income levels.
Is the effective tax rate on dividends ever negative in Ontario?
Yes. At lower income levels (roughly below $50,000 of total income), the combined federal and Ontario dividend tax credits on eligible dividends can exceed the tax on the grossed-up amount, producing a negative effective rate. This means eligible dividends actually reduce your total Ontario tax bill — useful for retirees or spouses with modest other income.

Looking for a different province? Use the main Dividend Tax Credit Calculator to switch between all provinces and territories.

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