Ontario Employer Health Tax

Definition

The Ontario Employer Health Tax (EHT) is a provincial payroll tax imposed under the Employer Health Tax Act on employers who pay remuneration to employees who report for work at a permanent establishment in Ontario, or who are paid from an Ontario permanent establishment. The tax funds the Ontario health care system, replacing the former Ontario Health Insurance Plan (OHIP) employee premium in 1990. EHT is administered directly by the Ontario Ministry of Finance, not by the CRA, and has its own registration, return, and remittance process separate from federal payroll filings.

Key rules

• EHT rates are graduated based on total Ontario payroll (including all associated employers):
  • Up to $200,000: 0.98%
  • $200,001 to $230,000: 1.101%
  • $230,001 to $260,000: 1.223%
  • $260,001 to $290,000: 1.344%
  • $290,001 to $320,000: 1.465%
  • $320,001 to $350,000: 1.586%
  • $350,001 to $380,000: 1.708%
  • $380,001 to $400,000: 1.829%
  • Over $400,000: 1.95%
• Remuneration means the gross amount paid to employees as defined in ITA sections 5, 6, and 7: salary, wages, bonuses, commissions, taxable benefits, directors' fees, and stock option benefits.
• Private sector employers receive a $1,000,000 exemption (confirm 2026) that shields the first $1 million of payroll. See .
• Associated employers must share the $1 million exemption on an agreed allocation filed on Form EHT 2026 (associated employers exemption allocation).
• Employers with Ontario payroll over $1,200,000 must make monthly instalments. Others pay annually with the EHT return due March 15 of the following year.

Example

A Toronto corporation has 2026 Ontario payroll of $2.5 million and no associated employers. Exempt portion: $1,000,000. Taxable portion: $1,500,000. Because total payroll exceeds $400,000, the flat 1.95% rate applies to the taxable portion.

The employer remits approximately $2,437.50 per month starting in February 2026 and files the EHT annual return by March 15, 2027.

Common mistakes

• Registering late. Employers must register for EHT within 15 days of the start of the month following the month they began paying remuneration in Ontario.
• Forgetting stock option benefits and taxable benefits. EHT remuneration includes non-cash taxable benefits reported on T4 slips.
• Ignoring the associated employer rule. A corporation with a low Ontario payroll may still exceed $1 million once the payroll of associated employers is added, losing access to the exemption.
• Applying the lowest graduated rate to the entire payroll. When total payroll exceeds $400,000, the 1.95% rate applies to the entire taxable amount (the graduated rates apply only when total payroll is under $400,000).

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