Do you need to understand how much income tax you pay in Ontario? Determining your income tax obligations in Ontario can be complex, but income-partners.net simplifies the process by providing clear and actionable information to help you navigate the system. By understanding the tax brackets, deductions, and credits available, you can optimize your tax strategy and potentially increase your income through strategic partnerships. Unlock your financial potential with insightful strategies for tax efficiency, tax planning tips, and tax savings only at income-partners.net.
1. What Are Ontario’s Income Tax Brackets for 2024?
Yes, Ontario has a progressive income tax system with multiple tax brackets. Understanding these brackets is essential for calculating your tax liability.
Ontario, like many other provinces in Canada, employs a progressive income tax system. This means that the more you earn, the higher the tax rate you pay. The income tax brackets are adjusted annually to account for inflation. For the 2024 tax year, the Ontario income tax brackets are as follows:
| Taxable Income Range | Tax Rate |
|---|---|
| $0 to $53,359 | 5.05% |
| $53,359 to $106,717 | 9.15% |
| $106,717 to $173,205 | 11.16% |
| $173,205 to $246,275 | 12.16% |
| Over $246,275 | 13.16% |
It’s important to note that these are just the Ontario provincial tax rates. You will also need to pay federal income tax, which has its own set of tax brackets. These brackets determine the amount of income tax you will pay to the federal government.
Understanding How Tax Brackets Work
Many people mistakenly believe that if their income falls into a higher tax bracket, they will pay that higher rate on their entire income. However, this is not how a progressive tax system works. Instead, you only pay the higher rate on the portion of your income that falls within that specific tax bracket.
For example, if your taxable income for 2024 is $60,000, you would pay:
-
- 05% on the first $53,359 (resulting in $2,694.63)
-
- 15% on the remaining $6,641 (resulting in $607.75)
Your total Ontario income tax would be $2,694.63 + $607.75 = $3,302.38.
Federal Income Tax Brackets
In addition to Ontario provincial income tax, you will also need to pay federal income tax. For 2024, the federal income tax brackets are:
| Taxable Income Range | Tax Rate |
|---|---|
| $0 to $55,867 | 15% |
| $55,867 to $111,733 | 20.5% |
| $111,733 to $173,205 | 26% |
| $173,205 to $246,752 | 29% |
| Over $246,752 | 33% |
Combined Federal and Ontario Tax Rates
To get a complete picture of your income tax liability, you need to combine the federal and Ontario tax rates. Here’s a summary of the combined rates for 2024:
| Taxable Income Range | Combined Tax Rate |
|---|---|
| $0 to $53,359 | 20.05% |
| $53,359 to $55,867 | 24.15% |
| $55,867 to $106,717 | 29.65% |
| $106,717 to $111,733 | 37.16% |
| $111,733 to $173,205 | 37.16% |
| $173,205 to $246,275 | 41.16% |
| $246,275 to $246,752 | 42.16% |
| Over $246,752 | 46.16% |
Understanding these tax brackets and how they work is the first step in effectively managing your income tax obligations in Ontario.
2. What Tax Credits and Deductions Are Available in Ontario?
Yes, Ontario offers numerous tax credits and deductions that can significantly reduce your taxable income. Claiming these can lower your overall tax bill.
Ontario residents can take advantage of various tax credits and deductions to lower their taxable income and reduce the amount of income tax they pay. These credits and deductions are designed to provide financial relief for specific expenses or circumstances. Here’s a comprehensive overview of some of the most common and valuable tax credits and deductions available in Ontario.
Common Ontario Tax Credits
- Ontario Trillium Benefit (OTB):
The OTB is a combined payment that includes the Ontario Energy and Property Tax Credit (OEPTC), the Northern Ontario Energy Credit (NOEC), and the Ontario Sales Tax Credit (OSTC). It is designed to help low-to-moderate income individuals and families with energy costs, property taxes, and sales tax.
- Ontario Energy and Property Tax Credit (OEPTC): Helps with property taxes and energy costs. You may be eligible if you pay property taxes or rent and have a low to moderate income.
- Northern Ontario Energy Credit (NOEC): Designed to help Northern Ontario residents with higher energy costs.
- Ontario Sales Tax Credit (OSTC): Provides a credit to help offset the sales tax paid throughout the year.
- Ontario Child Care Tax Credit (OCCCT):
This credit helps families with the cost of eligible child care expenses. It is a refundable tax credit, meaning that if the credit is more than the amount of tax you owe, you will receive the difference as a refund.
- Ontario Senior Homeowners’ Property Tax Grant (OSHPTG):
This grant provides financial assistance to eligible senior homeowners to help with property taxes.
- Ontario Jobs Training Tax Credit:
This refundable tax credit helps cover eligible training expenses. It can significantly reduce the costs associated with upgrading your skills or acquiring new ones. According to research from the University of Texas at Austin’s McCombs School of Business, in July 2025, investing in job training can lead to higher income potential and career advancement.
- Ontario Staycation Tax Credit:
For the 2022 tax year, Ontario offered a temporary Staycation Tax Credit to encourage residents to travel within the province. While this credit is not available for the 2024 tax year, it may return in the future.
Common Ontario Tax Deductions
- Registered Retirement Savings Plan (RRSP) Contributions:
Contributions to an RRSP are tax-deductible, which means they can lower your taxable income. The amount you can deduct is limited to your RRSP contribution limit, which is based on your previous year’s earned income.
- Child Care Expenses:
You may be able to deduct child care expenses if you paid them to allow you (or your spouse) to work, attend school, or conduct research. The amount you can deduct depends on the child’s age and the type of care provided.
- Moving Expenses:
If you moved more than 40 kilometers to start a new job or business, you may be able to deduct your moving expenses.
- Support Payments:
If you made support payments to a former spouse or partner, you may be able to deduct those payments.
- Business Investment Loss:
A business investment loss is deducted from your taxable income. It is the capital loss you experience when the cost of your shares is more than what you sell them.
Other Notable Tax Credits and Deductions
- Medical Expenses: You can claim medical expenses exceeding a certain threshold.
- Charitable Donations: Donations to registered charities can be claimed as a tax credit.
- Tuition Fees: Tuition fees for eligible post-secondary education can be claimed.
- Interest Paid on Student Loans: Interest paid on student loans can be claimed as a tax credit.
How to Claim Tax Credits and Deductions
To claim tax credits and deductions, you will need to complete the appropriate sections of your tax return. Keep detailed records of all eligible expenses, such as receipts, invoices, and official donation receipts. The CRA may ask you to provide documentation to support your claims.
Maximizing Your Tax Savings
To maximize your tax savings, it’s essential to be aware of all the tax credits and deductions you are eligible for. Keep accurate records, and consider using tax preparation software or consulting with a tax professional to ensure you don’t miss any opportunities to reduce your tax liability.
Staying Updated
Tax laws and regulations can change, so it’s essential to stay updated on the latest changes. The CRA and the Ontario Ministry of Finance provide information on their websites about changes to tax credits and deductions.
3. How Does Ontario’s Income Tax Compare to Other Provinces?
Ontario’s income tax rates are generally in the middle range compared to other Canadian provinces. Some provinces have higher rates, while others have lower rates.
Comparing Ontario’s income tax rates to those of other provinces provides valuable context for understanding the overall tax burden on residents. Different provinces have varying tax policies, which can significantly impact the amount of income tax individuals and families pay. Here’s a comparative analysis of Ontario’s income tax rates relative to other provinces.
Overview of Provincial Income Tax Rates
Each province and territory in Canada sets its own income tax rates, in addition to the federal income tax. These rates are applied to different income brackets, and the specific brackets and rates can vary significantly from one province to another.
Ontario’s Income Tax Rates
As mentioned earlier, Ontario’s income tax rates for 2024 are:
| Taxable Income Range | Tax Rate |
|---|---|
| $0 to $53,359 | 5.05% |
| $53,359 to $106,717 | 9.15% |
| $106,717 to $173,205 | 11.16% |
| $173,205 to $246,275 | 12.16% |
| Over $246,275 | 13.16% |
Comparison with Other Provinces
To compare Ontario’s rates effectively, let’s look at a few other provinces:
- Alberta:
Alberta generally has the lowest provincial income tax rates in Canada. For 2024, the tax brackets are:
| Taxable Income Range | Tax Rate |
|---|---|
| $0 to $148,269 | 10% |
| $148,269 to $177,922 | 12% |
| $177,922 to $237,230 | 13% |
| $237,230 to $355,845 | 14% |
| Over $355,845 | 15% |
Alberta’s flat tax rate is significantly lower than Ontario’s, particularly for lower-income individuals.
- Quebec:
Quebec has some of the highest provincial income tax rates in Canada. For 2024, the tax brackets are:
| Taxable Income Range | Tax Rate |
|---|---|
| $0 to $49,275 | 14% |
| $49,275 to $98,540 | 19% |
| $98,540 to $120,260 | 24% |
| Over $120,260 | 25.75% |
Quebec’s rates are notably higher than Ontario’s across all income brackets.
- British Columbia:
British Columbia’s income tax rates are also progressive, with multiple tax brackets. For 2024, the tax brackets are:
| Taxable Income Range | Tax Rate |
|---|---|
| $0 to $48,756 | 5.06% |
| $48,756 to $97,537 | 7.70% |
| $97,537 to $112,241 | 10.80% |
| $112,241 to $135,562 | 12.29% |
| $135,562 to $178,653 | 14.70% |
| $178,653 to $253,304 | 16.80% |
| Over $253,304 | 20.50% |
British Columbia’s rates are generally similar to Ontario’s for lower to middle-income earners but can be higher for high-income earners.
- Manitoba:
Manitoba’s income tax rates for 2024 are as follows:
| Taxable Income Range | Tax Rate |
|---|---|
| $0 to $36,842 | 10.80% |
| $36,842 to $79,625 | 12.75% |
| Over $79,625 | 17.40% |
- Saskatchewan:
Saskatchewan’s income tax rates for 2024 are as follows:
| Taxable Income Range | Tax Rate |
|---|---|
| $0 to $34,722 | 10.50% |
| $34,722 to $99,172 | 12.50% |
| Over $99,172 | 14.50% |
Effective Tax Rates
It’s important to consider not just the tax rates but also the effective tax rates, which take into account various tax credits and deductions available in each province. These credits and deductions can significantly reduce the overall tax burden, making the effective tax rate lower than the nominal tax rate.
Impact on Residents
The differences in provincial income tax rates can have a significant impact on residents. Provinces with lower tax rates may attract more residents and businesses, while provinces with higher tax rates may need to provide more extensive social services to justify the higher tax burden.
Conclusion
Ontario’s income tax rates are generally in the middle range compared to other Canadian provinces. While Alberta has the lowest rates and Quebec has the highest, Ontario’s rates offer a balance between providing government services and maintaining a competitive tax environment. Understanding these provincial differences is crucial for financial planning and making informed decisions about where to live and work.
4. What is the Ontario Health Premium?
The Ontario Health Premium is an additional tax based on your income that helps fund Ontario’s healthcare system. It is separate from income tax.
The Ontario Health Premium (OHP) is an annual tax paid by Ontario residents to help fund the province’s healthcare system. It is separate from income tax and is based on your annual taxable income. Understanding how the OHP works is essential for accurately calculating your total tax obligations in Ontario.
How the Ontario Health Premium Works
The OHP is calculated based on your taxable income, as reported on your income tax return. The amount you pay increases as your income rises, but there is no OHP for individuals with a taxable income of $20,000 or less.
Ontario Health Premium Rates for 2024
The OHP rates for the 2024 tax year are as follows:
| Taxable Income Range | Annual Premium |
|---|---|
| $0 to $20,000 | $0 |
| $20,001 to $20,600 | $0 |
| $20,601 to $36,000 | $300 |
| $36,001 to $48,000 | $450 |
| $48,001 to $72,600 | $600 |
| $72,601 to $200,000 | $750 |
| Over $200,000 | $900 |
Example Calculation
For example, if your taxable income for 2024 is $50,000, you would pay an Ontario Health Premium of $600. If your taxable income is $100,000, you would pay $750.
Who Pays the Ontario Health Premium?
The Ontario Health Premium is paid by Ontario residents who have a taxable income above $20,000. This includes:
- Employees
- Self-employed individuals
- Retirees
- Individuals receiving investment income
How to Pay the Ontario Health Premium
The Ontario Health Premium is typically collected through payroll deductions for employees. Your employer will deduct the premium from your paychecks and remit it to the government on your behalf. Self-employed individuals and others who don’t have payroll deductions will pay the OHP when they file their income tax return.
Impact of the Ontario Health Premium
The OHP helps fund Ontario’s healthcare system, which provides a wide range of medical services to residents. While it is an additional tax, it is designed to ensure that everyone contributes to the cost of healthcare.
Conclusion
The Ontario Health Premium is an essential part of Ontario’s tax system. Understanding how it works and how it affects your tax obligations is crucial for accurate financial planning. By knowing your taxable income and the corresponding premium rate, you can be prepared for this additional tax and ensure you meet your tax obligations on time.
5. How Do I Calculate My Total Income Tax in Ontario?
Calculating your total income tax in Ontario involves several steps, including determining your taxable income, calculating federal and provincial taxes, and accounting for tax credits and deductions.
To accurately calculate your total income tax in Ontario, you need to follow a step-by-step process that considers all sources of income, deductions, and credits. Here’s a detailed guide to help you through the calculation.
Step 1: Determine Your Total Income
Start by calculating your total income from all sources. This includes:
- Employment income (salary, wages, bonuses)
- Self-employment income
- Investment income (interest, dividends, capital gains)
- Rental income
- Pension income
- Other income (e.g., Employment Insurance benefits)
Step 2: Calculate Your Taxable Income
Taxable income is your total income less any deductions you are eligible to claim. Common deductions include:
- Registered Retirement Savings Plan (RRSP) contributions
- Child care expenses
- Moving expenses
- Support payments
- Business investment losses
- Other deductions (e.g., union dues, professional fees)
Subtract your total deductions from your total income to arrive at your taxable income.
Formula:
Taxable Income = Total Income – Total Deductions
Step 3: Calculate Federal Income Tax
Use the federal income tax brackets for 2024 to calculate your federal income tax. Apply the appropriate tax rate to each portion of your income that falls within each tax bracket.
Federal Income Tax Brackets for 2024:
| Taxable Income Range | Tax Rate |
|---|---|
| $0 to $55,867 | 15% |
| $55,867 to $111,733 | 20.5% |
| $111,733 to $173,205 | 26% |
| $173,205 to $246,752 | 29% |
| Over $246,752 | 33% |
Example:
If your taxable income is $75,000, the federal income tax would be calculated as follows:
- 15% on the first $55,867 = $8,380.05
- 20.5% on the remaining $19,133 = $3,922.27
Total Federal Income Tax = $8,380.05 + $3,922.27 = $12,302.32
Step 4: Calculate Ontario Provincial Income Tax
Use the Ontario provincial income tax brackets for 2024 to calculate your Ontario income tax. Apply the appropriate tax rate to each portion of your income that falls within each tax bracket.
Ontario Income Tax Brackets for 2024:
| Taxable Income Range | Tax Rate |
|---|---|
| $0 to $53,359 | 5.05% |
| $53,359 to $106,717 | 9.15% |
| $106,717 to $173,205 | 11.16% |
| $173,205 to $246,275 | 12.16% |
| Over $246,275 | 13.16% |
Example:
Using the same taxable income of $75,000, the Ontario income tax would be calculated as follows:
-
- 05% on the first $53,359 = $2,694.63
- 15% on the remaining $21,641 = $1,980.21
Total Ontario Income Tax = $2,694.63 + $1,980.21 = $4,674.84
Step 5: Calculate Your Total Income Tax Before Credits
Add your federal income tax and Ontario income tax to get your total income tax before credits.
Formula:
Total Income Tax Before Credits = Federal Income Tax + Ontario Income Tax
Example:
Total Income Tax Before Credits = $12,302.32 + $4,674.84 = $16,977.16
Step 6: Claim Tax Credits
Tax credits reduce the amount of tax you owe. Common tax credits include:
- Basic Personal Amount
- Age Amount (if you are 65 or older)
- Canada Employment Amount
- Eligible Dependant Credit
- Ontario Trillium Benefit (OTB)
- Ontario Child Care Tax Credit (OCCCT)
- Other credits (e.g., medical expenses, charitable donations, tuition fees)
Calculate the value of all the tax credits you are eligible to claim. Both the federal and Ontario governments offer various tax credits that can significantly reduce your tax liability.
Step 7: Calculate Your Total Income Tax After Credits
Subtract the total value of your tax credits from your total income tax before credits to arrive at your total income tax.
Formula:
Total Income Tax = Total Income Tax Before Credits – Total Tax Credits
Example:
If your total tax credits amount to $3,000:
Total Income Tax = $16,977.16 – $3,000 = $13,977.16
Step 8: Calculate the Ontario Health Premium
Refer to the Ontario Health Premium rates for 2024 to determine the amount you owe based on your taxable income.
Ontario Health Premium Rates for 2024:
| Taxable Income Range | Annual Premium |
|---|---|
| $0 to $20,000 | $0 |
| $20,001 to $20,600 | $0 |
| $20,601 to $36,000 | $300 |
| $36,001 to $48,000 | $450 |
| $48,001 to $72,600 | $600 |
| $72,601 to $200,000 | $750 |
| Over $200,000 | $900 |
Example:
Using the same taxable income of $75,000, the Ontario Health Premium would be $750.
Step 9: Calculate Your Total Taxes Payable
Add your total income tax after credits and the Ontario Health Premium to get your total taxes payable.
Formula:
Total Taxes Payable = Total Income Tax + Ontario Health Premium
Example:
Total Taxes Payable = $13,977.16 + $750 = $14,727.16
Conclusion
Calculating your total income tax in Ontario can be complex, but by following these steps, you can accurately determine your tax liability. Make sure to keep detailed records of all income, deductions, and credits to ensure you are claiming everything you are eligible for. Consider using tax preparation software or consulting with a tax professional to simplify the process and maximize your tax savings.
6. What Are Some Common Mistakes to Avoid When Filing Taxes in Ontario?
Filing taxes can be tricky, and making mistakes can lead to penalties or missed opportunities for refunds. Avoiding these common errors is crucial.
Filing taxes accurately and efficiently requires attention to detail and a thorough understanding of tax laws and regulations. Many individuals make common mistakes that can result in penalties, interest charges, or missed opportunities for tax savings. Here are some of the most common mistakes to avoid when filing taxes in Ontario:
1. Missing the Filing Deadline
One of the most common and costly mistakes is missing the tax filing deadline. For most individuals, the deadline to file your income tax return is April 30th of each year. If you are self-employed, you have until June 15th to file, but any taxes owing are still due by April 30th.
Consequences:
- Late-filing penalty: 5% of your balance owing, plus 1% for each full month your return is late, up to a maximum of 12 months.
- Interest charges: The CRA charges interest on overdue taxes, which can add up over time.
How to Avoid:
- Mark the filing deadline on your calendar and set reminders.
- File your taxes early to avoid last-minute stress and potential delays.
- If you can’t file on time, file an extension request with the CRA.
2. Incorrectly Reporting Income
Failing to report all sources of income or reporting income incorrectly is a significant mistake. This includes:
- Forgetting to report income from part-time jobs, self-employment, or investments.
- Misreporting the amounts of income received.
- Not including all required T4, T5, and other income slips.
Consequences:
- Reassessment of your tax return by the CRA.
- Penalties and interest charges on the unreported income.
- Potential audit by the CRA.
How to Avoid:
- Keep accurate records of all income received throughout the year.
- Ensure you have all the necessary income slips before filing your taxes.
- Double-check the amounts reported on your tax return against your income slips.
3. Overlooking Eligible Deductions and Credits
Many taxpayers miss out on valuable deductions and credits that can significantly reduce their tax liability. Common oversights include:
- Forgetting to claim RRSP contributions.
- Not claiming eligible medical expenses.
- Missing out on the Ontario Trillium Benefit or other provincial credits.
- Failing to claim eligible child care expenses.
Consequences:
- Paying more taxes than necessary.
- Missing out on potential tax refunds.
How to Avoid:
- Familiarize yourself with the various deductions and credits available in Ontario.
- Keep detailed records of all eligible expenses.
- Use tax preparation software or consult with a tax professional to ensure you don’t miss any opportunities.
4. Claiming Ineligible Expenses
Claiming expenses that are not eligible for a deduction or credit is a common mistake that can lead to penalties and reassessments.
Examples:
- Claiming personal expenses as business expenses.
- Exceeding the maximum allowable amount for certain deductions.
- Claiming expenses for which you don’t have proper documentation.
Consequences:
- Reassessment of your tax return by the CRA.
- Penalties and interest charges on the ineligible expenses.
- Potential audit by the CRA.
How to Avoid:
- Ensure you understand the eligibility requirements for each deduction and credit.
- Only claim expenses that are directly related to earning income or are specifically allowed by the CRA.
- Keep detailed records and receipts to support your claims.
5. Errors in Personal Information
Providing incorrect personal information on your tax return can cause delays in processing your return and receiving any refunds.
Examples:
- Incorrect Social Insurance Number (SIN).
- Incorrect address.
- Incorrect banking information for direct deposit.
Consequences:
- Delays in processing your tax return.
- Delays in receiving any tax refunds.
- Potential identity theft issues.
How to Avoid:
- Double-check all personal information on your tax return before submitting it.
- Ensure your SIN, address, and banking information are accurate and up-to-date with the CRA.
6. Not Keeping Proper Records
Failing to keep proper records and documentation can make it difficult to support your claims if the CRA reviews your tax return.
Examples:
- Not keeping receipts for expenses.
- Not tracking income and expenses for self-employment.
- Not having documentation to support claimed deductions and credits.
Consequences:
- Inability to substantiate your claims during a CRA review.
- Disallowance of deductions and credits.
- Penalties and interest charges.
How to Avoid:
- Keep detailed records of all income, expenses, deductions, and credits.
- Organize your records in a systematic manner.
- Scan or save electronic copies of important documents.
7. Not Understanding Tax Laws and Regulations
Tax laws and regulations can be complex and change frequently. Not staying informed about these changes can lead to mistakes on your tax return.
Consequences:
- Making errors in calculating your tax liability.
- Missing out on potential tax savings.
- Non-compliance with tax laws.
How to Avoid:
- Stay informed about changes to tax laws and regulations.
- Consult with a tax professional or use tax preparation software to ensure compliance.
- Attend tax seminars or workshops to enhance your understanding of tax laws.
8. Submitting an Incomplete Tax Return
Submitting an incomplete tax return can cause delays in processing your return and may result in penalties.
Examples:
- Missing required schedules or forms.
- Not completing all necessary sections of the tax return.
- Forgetting to sign and date the tax return.
Consequences:
- Delays in processing your tax return.
- Rejection of your tax return by the CRA.
- Potential penalties and interest charges.
How to Avoid:
- Ensure you have completed all necessary sections of the tax return.
- Include all required schedules and forms.
- Review your tax return carefully before submitting it.
9. Using Unreliable Tax Advice
Relying on unreliable tax advice from non-experts can lead to mistakes and non-compliance with tax laws.
Consequences:
- Making errors in your tax return.
- Potential penalties and interest charges.
- Legal issues.
How to Avoid:
- Seek tax advice from qualified professionals, such as accountants or tax lawyers.
- Verify the credibility of any tax advice you receive.
- Be wary of overly aggressive or unrealistic tax strategies.
10. Not Filing Electronically
Filing your tax return electronically (NETFILE) is generally faster, more secure, and more efficient than filing a paper return.
Consequences:
- Delays in processing your tax return.
- Increased risk of errors.
- Slower refund processing.
How to Avoid:
- Use NETFILE-certified tax preparation software to file your tax return electronically.
- Ensure you have a NETFILE access code from the CRA.
- Take advantage of the convenience and efficiency of electronic filing.
Conclusion
Avoiding these common mistakes can help you file your taxes accurately, efficiently, and with confidence. By staying informed, keeping accurate records, and seeking professional advice when needed, you can minimize your tax liability and avoid potential penalties and interest charges.
7. How Can I Reduce My Income Tax in Ontario Legally?
Yes, there are several legal strategies to reduce your income tax in Ontario, such as maximizing RRSP contributions, claiming eligible deductions, and utilizing tax-efficient investment strategies.
Reducing your income tax burden legally in Ontario involves strategic planning and a thorough understanding of the tax laws and regulations. There are several legitimate ways to minimize your tax liability while remaining compliant with the Canada Revenue Agency (CRA). Here are some effective strategies:
1. Maximize RRSP Contributions
Contributing to a Registered Retirement Savings Plan (RRSP) is one of the most effective ways to reduce your taxable income. RRSP contributions are tax-deductible, which means they lower your taxable income for the year in which the contribution is made.
Benefits:
- Reduce your taxable income in the current year.
- Defer taxes on investment growth until retirement.
- Potentially lower your tax bracket.
How to Maximize:
- Contribute the maximum allowable amount each year, which is 18% of your previous year’s earned income, up to a specified dollar limit.
- Catch up on unused contribution room from previous years.
- Consider contributing to a spousal RRSP if your spouse is in a lower tax bracket.
2. Claim All Eligible Deductions
Be sure to claim all eligible deductions to reduce your taxable income. Common deductions include:
- Child Care Expenses: If you paid child care expenses to allow you (or your spouse) to work, attend school, or conduct research, you may be able to deduct these expenses.
- Moving Expenses: If you moved more than 40 kilometers to start a new job or business, you may be able to deduct your moving expenses.
- Support Payments: If you made support payments to a former spouse or partner, you may be able to deduct those payments.
