Ontario Employer Health Tax Calculator With Exemption 2026
Work out your exemption, your taxable Ontario remuneration, the graduated rate that applies and the exact EHT payable. The only free tool that models the exemption being shared across associated corporations, which is where most Ontario groups get caught.
EHT payable this year
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Your Calculation, Step by Step
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Filing and Payment Obligations
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Points That Change This Result
What to Do Next
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Disclaimer: This calculator applies the Ontario Employer Health Tax Act with the $1,000,000 exemption, the $5,000,000 eligibility ceiling, the graduated rates from 0.98% to 1.95%, the $1,200,000 instalment threshold and the 15 March annual return deadline. Association is a question of control and is determined under the Income Tax Act rules adopted by the Employer Health Tax Act, so a group that looks separate commercially may still be associated. Public sector employers, multiple qualifying charity campuses, and employers with a permanent establishment in more than one province need a specific review. This page is general information, not tax advice.
What the Employer Health Tax Is and Who Pays It
The Employer Health Tax is an Ontario payroll tax on the total remuneration an employer pays to employees who report for work at, or are paid from, a permanent establishment in Ontario. It is a provincial tax, entirely separate from CRA payroll remittances, and it is administered by the Ontario Ministry of Finance rather than by the CRA.
Most small Ontario corporations never pay a cent of it, because the exemption covers the first $1,000,000 of Ontario payroll. The problems start at two moments: when a growing payroll crosses the exemption, and when an owner discovers that two corporations they run are associated and have been sharing one exemption all along without anyone allocating it.
The Exemption and the $5,000,000 Cliff
| Total Ontario Payroll | Exemption Available | EHT Position |
|---|---|---|
| $1,000,000 or less | $1,000,000 | No EHT payable |
| Between $1,000,000 and $5,000,000 | $1,000,000 | EHT at 1.95% on the excess |
| Above $5,000,000 | Nil, eligibility lost | EHT at 1.95% on the entire payroll |
| Registered charity, any size | $1,000,000 per qualifying campus | EHT on the excess only |
The cliff at $5,000,000 is brutal. An employer with $4,999,000 of Ontario payroll pays EHT on $3,999,000. An employer with $5,001,000 pays on the whole $5,001,000. That single thousand dollars of extra payroll costs $19,500 in additional tax, because the exemption disappears entirely rather than phasing out.
The Rate Table
The rate is graduated and is set by your total Ontario remuneration before the exemption, not after it. Because the exemption is $1,000,000, any employer with a full-year exemption who actually owes EHT is above $400,000 and therefore pays the top rate of 1.95%. The lower rates only come into play for part-year employers with a prorated exemption and for charities.
| Total Ontario Remuneration | Rate |
|---|---|
| Up to $200,000 | 0.98% |
| $200,000.01 to $230,000 | 1.101% |
| $230,000.01 to $260,000 | 1.223% |
| $260,000.01 to $290,000 | 1.344% |
| $290,000.01 to $320,000 | 1.465% |
| $320,000.01 to $350,000 | 1.586% |
| $350,000.01 to $380,000 | 1.708% |
| $380,000.01 to $400,000 | 1.829% |
| Above $400,000 | 1.95% |
Associated Corporations Share One Exemption
This is the single most expensive thing on this page. Where two or more employers are associated, they are entitled to one $1,000,000 exemption between them, not one each. The group must agree in writing how to allocate it, and file that allocation with the Ministry.
Association is determined under the control rules in the Income Tax Act. An owner with an operating company and a holding company, or with two operating companies under the same control, is almost always associated even though the businesses feel entirely separate.
| Structure | Exemption Available to the Group | Common Assumption |
|---|---|---|
| One corporation | $1,000,000 | Correct |
| Holdco and opco under common control | $1,000,000 shared | Often assumed to be $2,000,000 |
| Three opcos owned by the same person | $1,000,000 shared | Often assumed to be $3,000,000 |
| Two unrelated shareholders, no cross-ownership | $1,000,000 each | Correct |
| Group payroll above $5,000,000 | Nil for the whole group | Tested at group level, not per company |
The $5,000,000 test is applied to the group, not to each company. Three associated corporations with $2,000,000 of payroll each are a $6,000,000 group. None of them gets any exemption, and all three pay 1.95% on their full payroll. Owners who split operations across companies for commercial reasons frequently do not realise this until the assessment arrives.
Part-Year Employers
If you only had a permanent establishment in Ontario for part of the year, whether because you started up, wound down or moved, the exemption is prorated by the number of months. An employer with an establishment for four months gets four twelfths of $1,000,000, which is $333,333.
That is the situation where the graduated rates matter. A part-year employer with $350,000 of remuneration and a prorated exemption pays at 1.586%, not 1.95%.
Instalments and the $1,200,000 Threshold
| Annual Ontario Remuneration | Payment Requirement | Due Date |
|---|---|---|
| $1,200,000 or less | No instalments, pay with the annual return | 15 March following the year |
| Above $1,200,000 | Monthly instalments required | Fifteenth of the following month |
The instalment threshold is $1,200,000, not $1,000,000. That gap catches employers who correctly worked out that they owe EHT but assumed it was payable once a year, and then face instalment interest on top.
The Annual Return and Registration
- Registration: required within fifteen days after the month in which you become liable to pay EHT
- Annual return: due 15 March of the following calendar year
- Ceasing to have an establishment: a final return is due within forty days of the date you ceased
- Associated group allocation: the written agreement allocating the exemption must be filed with the Ministry
- Nil returns: an employer whose payroll is fully covered by the exemption and who is not registered generally has no return to file
What Counts as Ontario Remuneration
| Included | Not Included |
|---|---|
| Salaries, wages and bonuses | Contributions to a registered pension plan |
| Taxable benefits | Retiring allowances |
| Commissions | Non-taxable benefits |
| Directors’ fees | Payments to genuine self-employed contractors |
| Stock option benefits | Workers’ compensation benefits |
| Employer contributions to an RRSP | Pension income and death benefits |
| Amounts paid to former employees | Amounts paid to employees outside Ontario |
The association question is worth getting reviewed once. If it turns out two of your corporations are associated and have each been claiming a full exemption, the Ministry can reassess back several years with interest. If they are genuinely not associated, you want that documented before anyone asks. Our EHT filing service covers the registration, the allocation agreement and the annual return.
Frequently Asked Questions
Common questions from Ontario employers approaching the exemption.
Related Calculators and Guides
More tools for Ontario employers.
Not Sure Whether Your Corporations Are Associated?
It is the question that decides whether your group has one exemption or several, and the Ministry can reassess back years if it is wrong. Send us the ownership structure and we will confirm the position, prepare the allocation agreement and file the annual return.