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 66.67% on capital gains greater than $250,000 in a year effective January 1, 2026. The inclusion rate for corporations and trusts will increase to 66.67% on all capital gains.
This calculator helps you estimate capital gains tax in Ontario on the sale of property, stocks, and investments, taking into consideration the new capital gains tax changes proposed in the 2024 federal budget. While this change was originally supposed to be effective June 25, 2024, the Government of Canada announced that it has been postponed to January 1, 2026.
What is capital gains tax in Ontario?
Capital gains tax is a tax paid on the increase in value of investments or assets from their original purchase price. When you sell an asset for more than its purchase price, the difference is a capital gain, and a portion of that gain is taxable. Capital gains can be:
- Realized — when the asset is sold and the gain is locked in
- Unrealized — when the value increases but the asset hasn’t been sold yet
Only realized capital gains are taxable. Unrealized gains are not taxed until the asset is sold.
What is a capital loss?
A capital loss occurs when you sell an investment or asset for less than its adjusted cost base. Realized capital losses can be used to offset capital gains and reduce your taxable income. You can carry capital losses back 3 years or forward indefinitely to offset gains in other years. As with all tax matters, consulting a professional is advisable.
New capital gains tax in Canada
Changes to capital gains taxation in Canada target higher-income individuals who realize substantial capital gains each year. Here is how the new rules work:
- The inclusion rate increases from 50% to 66.67% on capital gains exceeding $250,000 in a year for individuals
- Capital gains under $250,000 per year remain at a 50% inclusion rate for individuals
- The inclusion rate for corporations and trusts increases to 66.67% on all capital gains
Government of Canada deferral
The federal government deferred the new inclusion rate from June 25, 2024 to January 1, 2026. Until that date, the 50% inclusion rate continues to apply to all capital gains.
Capital gains inclusion rate comparison
| Scenario | Current Rate (until Dec 31, 2025) | New Rate (from Jan 1, 2026) |
|---|---|---|
| Individual gains ≤ $250K | 50% | 50% |
| Individual gains > $250K | 50% | 66.67% |
| All corporate gains | 50% | 66.67% |
| All trust gains | 50% | 66.67% |
Capital gains example calculation in Ontario
Let’s walk through an example. Suppose you purchased an investment property for $500,000 and sold it for $750,000, with $15,000 in selling costs (real estate commissions, legal fees).
Under current rules (50% inclusion):
- Capital gain: $750,000 - $500,000 - $15,000 = $235,000
- Taxable capital gain: $235,000 × 50% = $117,500
- Tax (at ~43% marginal rate): ~$50,525
Under new rules (if gain exceeds $250K): For a $350,000 capital gain:
- First $250,000 × 50% = $125,000 taxable
- Remaining $100,000 × 66.67% = $66,670 taxable
- Total taxable: $191,670
- Compared to current: $350,000 × 50% = $175,000 taxable
The new rules add approximately $16,670 to the taxable amount on a $350,000 gain.
Capital gains tax rates in Ontario
These tables show the combined federal and Ontario marginal tax rates by bracket. Capital gains are included in your income and taxed at these rates on the taxable portion (after applying the inclusion rate).
2025 combined rates
| 2025 Taxable Income | Marginal Tax Rate |
|---|---|
| First $52,886 | 20.05% |
| $52,886 to $57,375 | 24.15% |
| $57,375 to $93,132 | 29.65% |
| $93,132 to $105,775 | 31.48% |
| $105,775 to $109,727 | 33.89% |
| $109,727 to $114,750 | 37.91% |
| $114,750 to $150,000 | 43.41% |
| $150,000 to $177,882 | 44.97% |
| $177,882 to $220,000 | 48.29% |
| $220,000 to $253,414 | 49.85% |
| Over $253,414 | 53.53% |
For the full breakdown of Ontario tax brackets including how the rates are built from federal and provincial components, see our detailed guide.
2024 combined rates
| 2024 Taxable Income | Marginal Tax Rate |
|---|---|
| First $51,446 | 20.05% |
| $51,446 to $55,867 | 24.15% |
| $55,867 to $90,599 | 29.65% |
| $90,599 to $102,894 | 31.48% |
| $102,894 to $106,732 | 33.89% |
| $106,732 to $111,733 | 37.91% |
| $111,733 to $150,000 | 43.41% |
| $150,000 to $173,205 | 44.97% |
| $173,205 to $220,000 | 48.29% |
| $220,000 to $246,752 | 49.85% |
| Over $246,752 | 53.53% |
While the tax rates are the same in 2024 and 2025, the bracket thresholds have been indexed for inflation.
Capital gains on second properties in Canada
Your principal residence is exempt from capital gains tax under the principal residence exemption. However, if you own a second home, cottage, rental property, or investment property, it is considered a taxable asset and any capital gain upon sale will be subject to tax.
It is important to track all costs that contribute to the adjusted cost base (ACB) of a second property. This includes:
- Original purchase price
- Land transfer tax paid
- Legal fees and commissions
- Capital improvements (renovations, additions)
- Inspection and appraisal fees
A higher ACB reduces the capital gain you have to report, directly lowering your tax bill.
What is adjusted cost base (ACB)?
The adjusted cost base is the initial cost of the capital property plus any other costs associated with purchasing or improving it, such as:
- Purchase commissions and brokerage fees
- Accounting and legal fees
- Capital improvements and renovations
- Ontario land transfer tax
For stocks, the ACB also includes reinvested dividends and return of capital adjustments.
How to calculate tax on capital gains
The formula to calculate capital gains tax:
- Calculate the capital gain: Sale price - Adjusted Cost Base (ACB) - Selling expenses = Capital gain
- Apply the inclusion rate: Capital gain × Inclusion rate (50% or 66.67%) = Taxable capital gain
- Apply your marginal tax rate: Taxable capital gain × Marginal rate = Tax owed
New Canadian Entrepreneur’s Capital Gains Incentive
To incentivize entrepreneurship in Canada, the capital gains inclusion rate would be reduced to one-third on a maximum of $2 million in eligible capital gains. The maximum will increase by $400,000 each year starting in the 2025 tax year, reaching $2 million in 2029. Combined with the new $1.25 million lifetime capital gains exemption, this provides entrepreneurs with preferential tax treatment on capital gains up to $6.25 million.
Strategies to reduce capital gains tax in Ontario
- TFSA — investments held in a Tax-Free Savings Account are completely exempt from capital gains tax
- RRSP — contributions to an RRSP grow tax-deferred; capital gains within an RRSP are not taxed until withdrawal
- FHSA — the First Home Savings Account offers tax-free growth for first-time home purchases
- Capital losses — use realized losses to offset gains in the current year, carry back 3 years, or carry forward indefinitely
- Principal residence exemption — designate your primary home to exempt it from capital gains
- Timing — if possible, spread dispositions across tax years to stay under the $250,000 threshold for the lower inclusion rate
How to use this capital gains tax calculator
The calculator takes three inputs:
- Your income — your total income for the tax year (determines your marginal rate)
- Fair market value — the amount you sold the asset for
- Adjusted cost base — the original cost plus improvement costs
The calculator determines your marginal tax bracket and estimates the capital gains tax for both the current and proposed inclusion rates.
Frequently asked questions
How is capital gains tax calculated in Ontario?
Take your capital gain (sale price minus ACB and expenses), multiply by the inclusion rate (50%), then apply your marginal tax rate. The top combined Ontario rate is 53.53%.
What is the capital gains inclusion rate in Canada?
Currently 50% for all gains. Effective January 1, 2026, it increases to 66.67% on gains exceeding $250,000/year for individuals, and on all gains for corporations and trusts.
Is there capital gains tax on a primary residence?
No. Your principal residence is exempt under the principal residence exemption.
What costs can reduce capital gains tax?
Your adjusted cost base includes the purchase price plus commissions, legal fees, land transfer tax, and capital improvements — all of which reduce your taxable gain.
Related guides
- Ontario tax brackets
- Ontario land transfer tax calculator
- TFSA contribution limit guide
- RRSP contribution limit guide
- FHSA calculator
- Canada capital gains tax calculator
