Ontario Small-Business Corporate Tax Rates: 2026 Illustration
A plain-language reference showing the federal and Ontario rates that may apply to qualifying active business income. It does not compare incorporation with sole proprietorship and does not estimate anyone's personal tax result.
Rates in effect during 2026
The federal small-business rate is 9%. Ontario's lower corporate income-tax rate was 3.2% through June 30, 2026 and is 2.2% from July 1, 2026. These rates generally apply to income eligible for the small-business deduction, subject to the corporation's available business limit.
| Period | Federal | Ontario | Combined |
|---|---|---|---|
| January 1–June 30, 2026 | 9% | 3.2% | 12.2% |
| July 1–December 31, 2026 | 9% | 2.2% | 11.2% |
If a corporation's taxation year straddles July 1, 2026, the Ontario rate change is prorated according to the number of days in the taxation year for which each rate applies. The corporation's combined effective rate will therefore fall between 12.2% and 11.2% before other adjustments.
Fixed arithmetic examples at 11.2%
The table simply multiplies four sample amounts by the 9% federal rate and the 2.2% Ontario rate in effect from July 1, 2026. It assumes every dollar shown is eligible for both small-business rates and makes no other calculation.
| Sample eligible income | Federal at 9% | Ontario at 2.2% | Combined arithmetic |
|---|---|---|---|
| $50,000 | $4,500 | $1,100 | $5,600 |
| $100,000 | $9,000 | $2,200 | $11,200 |
| $250,000 | $22,500 | $5,500 | $28,000 |
| $500,000 | $45,000 | $11,000 | $56,000 |
These examples are not projected tax bills or savings. They exclude all personal tax, salary, dividends, CPP, credits, deductions, integration, and tax that may arise when corporate funds are paid to a shareholder.
Official sources
Rates reviewed July 14, 2026.