Your marginal tax rate in Ontario for 2025: the brackets that matter

Your marginal tax rate isn't what you pay on your whole paycheque. It's what gets taken from your next dollar of income - and that's the number that matters for RRSP decisions.

Ontario stacks federal and provincial tax brackets on top of each other. The federal government takes its cut first, then Ontario adds theirs. Here's how it breaks down for 2025:

Up to $57,375: 20.05% marginal rate (15% federal + 5.05% Ontario)

$57,375 to $57,591: 24.15% (20.5% federal + 3.65% Ontario - you hit Ontario's basic exemption ceiling)

$57,591 to $79,511: 29.65% (20.5% federal + 9.15% Ontario)

$79,511 to $114,750: 31.48% (20.5% federal + 10.98% Ontario)

$114,750 to $158,519: 37.48% (26% federal + 11.48% Ontario)

$158,519 to $220,000: 40.48% (29% federal + 11.48% Ontario)

Above $220,000: 44.48% (33% federal + 11.48% Ontario)

The jumps matter. At $80,000 in Ontario, your marginal rate is 31.48%. That RRSP contribution saves you roughly $315 for every $1,000 you put in. At $120,000, it's $374 back per $1,000. The difference compounds.

Most people think their tax rate is what they see on their T4's average rate - total tax divided by total income. That's not the rate that determines your RRSP refund. If you earned $80,000 and paid $18,000 in total tax, your average rate is 22.5%. But your marginal rate - the one that actually matters - is 31.48%.

Here's the catch: these brackets assume you have no other deductions. Pension contributions, union dues, and childcare expenses all reduce your taxable income first. So does your RRSP contribution. If you're right at a bracket boundary, a large enough RRSP contribution can drop you into the lower bracket and reduce the refund you were expecting.

The Ontario Health Premium also kicks in at certain income levels, but it's calculated separately and doesn't change your marginal rate for RRSP purposes.

Your 2025 RRSP contribution room is based on last year's earned income. The refund you get is based on this year's marginal rate. If your income jumped significantly between years, the math gets more favourable. If it dropped, less so.

TaxSplit.ca will calculate your exact marginal rate based on your income and show you what each RRSP dollar is actually worth as a refund. The brackets above are the foundation - but your specific situation determines what you actually get back.

If you're earning between $57,000 and $80,000 in Ontario, you're in the sweet spot where RRSP contributions start making serious sense. Below $50,000, a TFSA usually wins. Above $100,000, the RRSP math gets hard to argue with.