Physician Tax Calculator Ontario 2026

How Ontario Physicians Are Taxed on OHIP Billings

OHIP does not withhold tax. Every dollar the Ministry pays lands in your account gross, and the whole liability falls on you at year end and through quarterly instalments. That is the single largest difference between a physician’s finances and those of a salaried professional, and it is why an accurate view of the number after overhead and after tax matters more in medicine than in almost any other profession.

Unincorporated, your billings are business income. You deduct overhead, and the remaining net professional income is taxed at your personal marginal rate, which in Ontario reaches 53.53% once taxable income passes $258,482 in 2026. On top of that you pay both halves of CPP as a self-employed contributor, and the Ontario Health Premium of up to $900.

Incorporated through a Medicine Professional Corporation, the billings belong to the corporation. The corporation deducts overhead and pays corporate tax of 12.2% on the first $500,000 of active business income in Ontario. Only the money you actually take out is taxed personally. Everything you leave inside compounds on a base that has been reduced by 12.2% rather than by 53.53%.

2026 Rates Used in This Calculator

Typical Overhead by Specialty

Overhead is the input physicians get wrong most often, because group splits and hospital arrangements hide part of it. If your group deducts a percentage before paying you, that percentage is your overhead and your gross billings figure should be the amount billed, not the amount received. The figures below are planning starting points only. Please use your own accounts where you have them.

Sole Proprietor Against a Medicine Professional Corporation

When Incorporation Starts to Pay for a Physician

The test is not your billings. It is the gap between your net professional income and the cash you actually spend. A physician billing $600,000 who draws every dollar gets almost nothing from a corporation, because there is nothing left inside to defer on. A physician billing $340,000 who lives on $150,000 has close to $150,000 a year sitting inside at 12.2%, and that is a real and compounding advantage.

• Strong case: net professional income comfortably above your spending, with the surplus intended for long-term investment
• Moderate case: a surplus of $50,000 a year, where the deferral covers the compliance cost several times over
• Weak case: residents, fellows and new-in-practice physicians who spend everything they earn and are still paying down student debt
• Consider waiting: a first year of practice with heavy start-up costs, where net income is temporarily low

Do Not Forget the Personal Tax Instalments

Whether you incorporate or not, quarterly instalments apply once your net tax owing exceeds $3,000 in the current year and in either of the two preceding years. Physicians moving from residency salary into billings are frequently caught by this in year two, when the first full year of billing income creates both a large balance owing and a full instalment schedule at the same time.

Who Can Own Shares, and Why Split Income Rules Matter

Ontario is more generous than most provinces on share ownership. Under the Business Corporations Act, non-voting shares of a Medicine Professional Corporation may be held by a spouse, a child or a parent of the physician. Voting shares must be held by members of the College.

That permission is a corporate law permission, not a tax result. Since 2018 the tax on split income rules apply the top personal rate to dividends received by a family member who is not genuinely active in the business, unless a specific exclusion applies. The most commonly available exclusions for a physician household are where the receiving spouse is 65 or older, or where the family member works an average of 20 hours per week in the business.

HST and Physician Billings

Insured medical services are exempt supplies. That means no HST is charged on OHIP billings, and equally no input tax credits can be claimed on the HST embedded in rent, equipment and supplies. For most physicians that makes overhead roughly 13% more expensive than the headline invoice suggests, and it is a cost that neither incorporation nor any structure removes.

Uninsured services are different. Cosmetic procedures, third-party medical reports, insurance examinations, certain notes and forms, and some occupational health work are taxable supplies. Once those taxable revenues exceed $30,000 over four consecutive calendar quarters, HST registration is mandatory and returns must be filed even though the majority of the practice remains exempt.

What This Calculator Models That Most Do Not

What the Calculator Does Not Model

• Individual pension plans: often stronger than an RRSP for an established physician over 40 with a long salary history
• Corporate investment income: passive income above $50,000 grinds the federal small business deduction, and refundable tax applies to investment earnings inside the corporation
• RRSP, FHSA and childcare deductions: these reduce personal tax in both columns and change the crossover point
• Lifetime capital gains exemption: generally not available on a Medicine Professional Corporation sale because the practice cannot be sold with the licence
• Hospital employment income and pension adjustments: a hospital T4 with a pension changes RRSP room materially
• Incorporation year timing: a short first fiscal year changes the small business deduction available in year one
• Spousal and family circumstances: the split income analysis is specific to each household