At $120,000 in Ontario, your take-home pay is $85,628 annually or $7,136 per month.
Payroll deductions max out early in the year, and Ontario surtax becomes a dominant factor. Unlike lower salaries where CPP and EI shape your retention; here it’s the interaction between higher federal brackets and Ontario’s tiered surtax structure that determines how much of each raise you actually keep.
Use the Ontario take-home calculator to estimate your net income after taxes and visit the salary hub to explore additional income levels and comparisons.
✅ 2026 Tax Data Verified — This guide reflects current CRA payroll rules and Ontario tax thresholds.
How deductions work at $120,000
At $120,000, you are fully above all payroll contribution ceilings.
Employment Insurance (EI) applies only to the first $68,900 of earnings. At $120,000, you typically reach the EI maximum around June or July. After that, EI stops entirely for the remainder of the year.
Canada Pension Plan (CPP) operates in two tiers:
- Base CPP applies up to $74,600
- CPP Tier 2 applies between $74,600 and $85,000
At $120,000, both tiers are fully used. Base CPP usually caps around July or August, and CPP2 typically caps around September. After early fall, no further CPP deductions apply.
Ontario Health Premium totals approximately $750 annually at this income level and is embedded within provincial tax withholding.
Ontario Surtax becomes a meaningful factor at $120,000. Ontario applies surtax in two tiers based on your provincial tax amount:
- 20% surtax on provincial tax above $5,818
- 56% surtax on provincial tax above $7,446
This does not mean 56% tax on your income. It means your provincial tax amount is multiplied by additional surtax percentages once those thresholds are crossed. At this income level, surtax meaningfully increases your effective provincial tax rate.
Why your paycheque changes during the year
The timing pattern at $120,000 is front-loaded. Payroll deductions exhaust quickly, leaving only income tax for the latter part of the year.
January: CPP and EI reset. If you maxed them out the previous year, contributions restart.
Early summer (June–July): EI reaches its annual cap and stops deducting. Your paycheque increases modestly.
Late summer (July–August): Base CPP hits its maximum and stops.
Early fall (September): CPP2 reaches its cap and stops deducting.
By October, all payroll deductions are exhausted. From that point forward, only income tax (including Ontario surtax) and the Ontario Health Premium remain. Your paycheque stabilizes at a higher net amount for the rest of the year, but the increase is less dramatic than at lower incomes because surtax continues applying regardless of payroll caps
How $120,000 compares to nearby salaries
vs. $100,000
Moving from $100,000 to $120,000 increases annual take-home pay by approximately $12,918, or $1,076 per month.
You retain about 64% of the $20,000 raise.
The reduction comes primarily from higher marginal federal tax and intensified Ontario surtax.
vs. $150,000
Compared to $150,000, a $120,000 salary results in about $16,976 less in annual take-home pay, or roughly $1,414 per month.
This reflects approximately 56% retention on that $30,000 increase, largely due to stacked marginal tax rates and surtax pressure.
Frequently Asked Questions
Does Ontario surtax mean I’m paying 56% tax?
No. The 56% surtax applies to your provincial tax amount, not your income. It increases the provincial portion of your tax once certain thresholds are crossed. It does not mean 56% of your salary is taxed.
Do I pay CPP on the full $120,000?
No. Base CPP applies only up to $74,600, and CPP Tier 2 applies between $74,600 and $85,000. Income above $85,000 does not incur additional CPP contributions. Once both tiers reach their annual maximums, CPP stops for the rest of the year.
Does earning more always mean keeping less of each raise?
Not always, but the percentage you retain generally declines as income rises. At $120,000, higher federal brackets and Ontario’s surtax structure increase the marginal tax applied to additional income. This reduces the share of each raise you keep. However, your total net income still increases with every raise — the percentage retained becomes smaller, even though the dollar amount kept is higher.
Is $120,000 considered high income in Ontario?
Yes. It sits well above the provincial median. However, in high-cost cities like Toronto, housing and childcare expenses can still significantly impact disposable income.