Ontario 2025 Capital Gains Tax Calculator
This Ontario capital gains tax calculator helps estimate tax on capital gains based on the current inclusion rate and compares it to the inclusion rate announced in the federal 2024 budget. For individuals the inclusion rate will increase from 50% to 67% on capital gains greater than $250,000 in a year effective January 1, 2026. The inclusion rate for corporations and trusts have an increased rate of 67% on all capital gains.
This calculator helps you calculate capital gains tax in Ontario on the sale of property and stocks taking into consideration the new capital gains tax which was proposed in the 2024 federal budget. While this capital gains tax change was supposed to be effective June 25th, 2024 the Government of Canada has announced that it has been postponed and will be effective January 1, 2026.
What is capital gains tax in Ontario?
Capital gains tax is a fee paid on the increase in value of investments or assets from their original purchase price. When sold for more than the purchase price, this results in a capital gain, which is taxable. Capital gains can be “realized” when sold, or “unrealized” when value increases but the asset isn’t sold yet. While unrealized gains aren’t taxed until sold, it’s essential to consult a tax professional for personalized advice due to varying financial situations.
What is a capital gains loss?
A capital loss occurs when you sell an investment or asset for less than its original purchase price. This loss is the difference between the purchase price and the lower sale price. Similar to capital gains, capital losses can be “realized” when the sale occurs, or “unrealized” when the asset’s value decreases but hasn’t been sold. While unrealized losses can indicate a drop in value, they aren’t counted for tax purposes until the asset is sold. Realized capital losses can offset capital gains and reduce taxable income. As with all financial matters, consulting a tax professional is advisable to understand the implications for your specific situation.
New capital gains tax in Canada
New changes were made to capital gains tax in Canada which target high income individuals who realize substantial capital gains each year. Let’s go over how this tax change will impact residents of Ontario. This change can also have a impact on individuals who are disposing of other personal property that would not be expempt under the principal tax exemption such as cottages, rental properties, farms and shares of private corporations.
Note: there has been a deferral in the implementation of the new capital gains inclusion rate as discussed below.
There were changes to the tax in Canada that came into effect on June 25th, 2024 these are the changes and how they will impact tax on capital gains.
- The amount of capital gains that will be increased from 50% (1/2) to 67% (2/3) on capital gains in excess of $250,000 in a year.
- For capital gains that are under $250,000 in a year the inclusion rate for individuals will remain at 50%.
- The inclusion rate for capital gains for corporations and trusts will increase to 67% on all capital gains.
Government of Canada announces deferral of new capital gains inclusion rate
The federal government is deferring the new capital gains incusion rate from June 25, 2024 to january 1, 2026. This new inclusion rate would have the inclusion rate increase from fifty percent to two thirds for those capital gains realized above $250,000 by individuals and all capital gains realized by corporations and most types of trusts.
Capital gains tax inclusion rates under new rules
These are the new inclusion rates under the rules effective June 25th, 2024:
| Amount of Capital Gain | Inclusion Rate |
|---|---|
| Below $250,000 | 50% (1/2) |
| Above $250,000 | 67% (2/3) |
Capital gains tax rates in Ontario
This table breaks down the combined federal and Ontario tax rates by tax bracket for the 2024 tax year.
| 2024 Taxable Income | Other Income Marginal Tax Rate |
|---|---|
| first 51446 | 20.05% |
| over $51,446 up to $55,867 | 24.15% |
| over $55,867 up to $90,599 | 29.65% |
| over $90,599 up to $102,894 | 31.48% |
| over $102,894 up to $106,732 | 33.89% |
| over $106,732 up to $111,733 | 37.91% |
| over $111,733 up to $150,000 | 43.41% |
| over $150,000 up to $173,205 | 44.97% |
| over $173,205 up to $220,000 | 48.29% |
| over $220,000 up to $246,752 | 49.85% |
| over $246,752 | 53.53% |
Here are the 2025 tax rates for Canada and Ontario combined. While the tax rates for 2025 stayed the same when compared to 2024, the taxable income amounts within each bracket has changed from the prior year. For example, the first combined bracked in 2024 was taxed at 20.05% on the first $51,446 of income which is now 20.05% on the first $52,886 in 2025.
| 2025 Taxable Income | Other Income Marginal Tax Rate |
|---|---|
| first 52886 | 20.05% |
| over $52,886 up to $57,375 | 24.15% |
| over $57,375 up to $93,132 | 29.65% |
| over $93,132 up to $105,775 | 31.48% |
| over $105,775 up to $109,727 | 33.89% |
| over $109,727 up to $114,750 | 37.91% |
| over $114,750 up to $150,000 | 43.41% |
| over $150,000 up to $177,882 | 44.97% |
| over $177,882 up to $220,000 | 48.29% |
| over $220,000 up to $253,414 | 49.85% |
| over $253,414 | 53.53% |
Capital gains on second properties in Canada
In Canada you are able to deem a property as your principal residence when makes it exempt for tax purposes. However, for those who have purchased a second home, it is considered to be a taxable asset and will be subject to capital gains. It is still important to keep track of any cost that may be used to calculated the adjusted base cost (ACB) on a second property in Ontario. This will help you avoid capial gains tax as these costs will overall reduce the amount of capital gain that you have to realize.
What is a capital gain in Canada?
A capital gain occurs in Canada when you sell capital property for more than the adjusted cost base if you were to sell the capital property for less than the adjusted cost base (ABC) you would have a capital loss.
Adjusted Cost Base (ABC): The initial cost of the capital property plus any other costs asociated with purchasing or making improvements the capital property, such as commissions, accounting and legal fees or improvements. An example of a large cost associated with the purchas eof a home is Ontario land transfer tax.
How to calculate tax on capital gains?
The formula to calculate tax on captail gains includes calculating the capital gain and multiplying the capital gain by the inclusion rate and tax rate.
Proceeds of disposition less Adjusted cost base (ACB) plus Expenses equals Captial gain / loss
New Canadian Entrepreneur’s Capital Gains Incentive
To help incentivize entrepreneurship in Canada the capital gains inclusion rate would be reduced to one-third on a maximum of $2 million dollars in eligible capital gains. The maximum capital gain will increase by $400,000 each year starting in the 2025 tax year, reaching a maximum of $2 million in 2029. This would provide entrepreneurs with a tax incentive on capital gains up to $6.25 million when paired with the new $1.25 million lifetime capital gains exemption.
How to use this capital gains tax calculator?
For calculating capital gains in Ontario this capital gains tax calculator takes three inputs. The first input is your income. The second is the fair market value or what you sold you home or stock for. The last input is the adjusted cost base of the asset you are selling. From these inputs the capital gains tax calculator will determine your marginal tax bracket and help you estimate taxes. This calculator takes into account the federal and provincial basic personal tax credits. You may be able to claim additional tax credits. It is important to consult a professional.
