Ontario's small business tax rate is 12.2% combined through June 30, 2026, dropping to 11.2% combined on or after July 1, 2026, on the first $500,000 of active business income for an eligible CCPC. Active business income above that range is taxed at 26.5% combined throughout the year. The $500,000 small-business limit itself is not changing — only the rate is dropping.
The rate at a glance
| Income band (2026 tax year) | Federal | Ontario | Combined |
|---|---|---|---|
| Small-business, before July 1, 2026 | 9% | 3.2% | 12.2% |
| Small-business, on/after July 1, 2026 | 9% | 2.2% | 11.2% |
| General (above small-business range) | 15% | 11.5% | 26.5% |
The rate cut is legislated under Bill 97, the Plan to Protect Ontario Act (Budget Measures), 2026. A corporation whose fiscal year straddles July 1, 2026 prorates the 3.2% and 2.2% rates by days on each side of the effective date. The $500,000 limit stays the same and is still shared among associated corporations and ground down by passive-income rules.
Full guide
For the mid-year proration mechanics, a comparison against Alberta and BC, and Ontario's sales-tax and Employer Health Tax context, see the Ontario Corporate Tax Guide. To estimate your own liability, use the corporate tax calculator, or browse the Ontario taxes FAQ hub.
How RN Canada helps
RN Canada is an accounting and advisory firm headquartered in Edmonton, serving Ontario and Toronto-area clients remotely. Led by Ozgur Duymaz, Ph.D., CPA (Canada), ACCA (UK), CMA (US), we prepare T2 corporate returns for Ontario CCPCs and model the July 1, 2026 rate change for your specific fiscal year-end. See our tax return preparation service.
Frequently asked questions
12.2% combined (9% federal + 3.2% Ontario) on the first $500,000 of active business income before July 1, 2026, dropping to 11.2% combined (9% federal + 2.2% Ontario) on or after July 1, 2026, under a legislated mid-year rate cut.
26.5% combined — 15% federal general plus 11.5% Ontario general — on active business income above the $500,000 small-business range. This general rate does not change on July 1, 2026; only the small-business rate does.
No. The $500,000 small-business limit is unchanged — Bill 97 cuts only the rate. A separate bill, Bill 12, would have raised the limit to $600,000, but it never became law.
Bill 97, the Plan to Protect Ontario Act (Budget Measures), 2026, lowers Ontario's small-business rate from 3.2% to 2.2% effective July 1, 2026. Corporations with a fiscal year straddling that date prorate the two rates by the number of days on each side.
Ontario's combined small-business rate (12.2% before July 1, 11.2% after) sits above Alberta's 11% and BC's 11%. After July 1, 2026, the gap narrows to about 0.2 points.
Yes. Our corporate tax calculator estimates federal-plus-provincial corporate income tax and can model Ontario's small-business and general bands, including the July 1, 2026 rate change.