TD1 Form Ontario 2026: New Hire Guide for Employers

→ Quick Answer

→ Why the 2026 TD1 update is different

Every January, the Canada Revenue Agency (CRA) reissues the TD1 Personal Tax Credits Return with updated dollar amounts, and every January, Ontario employers get the same wave of new-hire questions. Do I need a new form? Does my old TD1 still count? Did the rules change?

For 2026, the answers are simpler than they look. The forms themselves work the same way they always have. The CRA has only indexed the credit amounts for inflation. The Ontario TD1ON basic personal amount rose modestly. Federal credits nudged up as well. Nothing about how you complete or process the form has changed.

What can go wrong is procedural, not conceptual. New hires who skip the provincial form get over-withheld. Employers who miss a mid-year update can invite CRA scrutiny. This guide walks Ontario employees and employers through both, using the 2026 numbers.

◆ Quick Start: Pick your path

Find yourself below. For a broader payroll walkthrough, see our complete Ontario payroll guide for 2026.

◆ What actually changed on the 2026 Ontario TD1ON

The CRA calculates these annual increases using an indexation factor tied to the Consumer Price Index. For 2026, that factor pushed each Ontario credit up by roughly two percent.

Here is what the 2026 TD1ON credit lines look like:

• →Basic personal amount is $12,989 — the portion of Ontario employment income that will not be taxed provincially.
• →Age amount is $6,342 for employees who will be 65 or older by December 31, 2026, with a phase-out beginning at $47,210 of net income.
• →Pension income amount is $1,796 for eligible pension from an employer plan, RRIF, or annuity.
• →Disability amount is $10,494 for employees with an approved Disability Tax Credit Certificate (Form T2201).
• →Spouse or eligible dependant amount is up to $11,029, subject to the dependant’s income.

◇ Federal TD1 vs Ontario TD1ON side by side

Every employee whose province of employment is Ontario needs two forms — one federal, one provincial. They are not duplicates. The federal TD1 sets the credits used for federal income tax withholding. The Ontario TD1ON sets the credits used for Ontario provincial withholding. Both feed into the same paycheque calculation, but they use different credit amounts.

The table below shows where the two forms diverge on the credits most Ontario employees actually use.

An employee who ignores the provincial form is over-withheld on Ontario tax throughout the year and recovers the difference only when the T1 personal tax return is filed. The refund arrives eventually, but the interest-free loan to the CRA is avoidable.

◇ Employee or contractor: who actually needs a TD1

Ontario SMEs frequently blur this line, and the CRA does not. Misclassifying an employee as a contractor can expose the business to back Canada Pension Plan (CPP) contributions, back Employment Insurance (EI) premiums, penalties, and interest.

For the tests the CRA uses when it disputes a classification, see the worker classification rules Ontario employers get wrong.

▶ Step-by-step: filling out and processing a 2026 TD1 in Ontario

Both the employee and the employer have work to do before the first paycheque. Here is the sequence that keeps the file audit-defensible.

1. 1
   Employer distributes the formsOn offer acceptance, send the new hire both the federal TD1 and the TD1ON — as PDFs from canada.ca or through your payroll platform’s e-signature workflow.
2. 2
   Employee completes Line 1For most workers, this is the only line that applies. Enter $16,452 on the federal TD1 and $12,989 on the TD1ON. If net income will exceed $181,440, the TD1-WS worksheet calculates the reduced federal amount.
3. 3
   Employee reviews Lines 2 through 12Age, pension income, disability, spouse or eligible dependant, tuition — complete only the lines that apply. Leave the rest blank.
4. 4
   Employee signs and returns both formsDigital signature is acceptable when it meets CRA e-signature requirements.
5. 5
   Employer applies the claim codeThe Line 13 total on each form maps to a federal and a provincial claim code that payroll software uses to calculate source deductions — the tax withheld from each pay and remitted to the CRA.
6. 6
   Employer files both signed formsBoth signed TD1 and TD1ON forms are placed in the employee record. The CRA books-and-records rule generally requires six-year retention.
7. 7
   Employer remits withheld taxRemittance follows the assigned PD7A schedule or the practical guide to CRA My Business Account.

▶ Mid-year updates, second jobs, and additional withholding

Life changes trigger a new TD1. If you marry, separate, add a dependant, receive a Disability Tax Credit Certificate, or your spouse returns to work, the credits on your existing TD1 no longer reflect your situation. Under the Income Tax Act, you generally file a new TD1 with your employer within seven days of the change if that change reduces your credits.

A second employer changes the math. If you take on a second job while keeping the first, you can only claim the full basic personal amount on one TD1. On the second employer’s TD1, check the “more than one employer or payer at the same time” box and enter zero on Line 13. Skipping this step typically guarantees under-withholding and an unexpected tax bill at year-end.

If you have RRSP contributions, child-care expenses, or other deductions the TD1 does not cover, Form T1213 can authorize your employer to reduce tax at source.

▲ Penalties for late, missing, or wrong TD1 forms

The CRA rarely pursues the daily penalty for a single honest oversight, but the exposure is real if a pattern signals underreporting. Liability for the content of the form sits with the employee. The employer’s job is to collect the signed form, apply the claim code declared, and retain the record for six years.

✗ Common TD1 mistakes Ontario employers and new hires make

Payroll issues rarely surface on the first paycheque. They surface at year-end when a T4 does not match a T1 return. Here are the recurring TD1 errors we see in Ontario payroll files.

• →Using the wrong province’s form. Ontario employees need the TD1ON, not TD1BC or TD1AB. Payroll platforms defaulting to province of residence rather than employment cause this quietly.
• →Skipping the provincial form entirely. An employee who submits only the federal TD1 is over-withheld on Ontario tax all year.
• →Claiming the basic personal amount on both employers’ TD1 forms. Only one TD1 carries the full credits; the second must show zero on Line 13.
• →Missing the seven-day update window. Life changes that reduce credits require a new TD1 within seven days.
• →Treating a contractor as an employee for TD1 purposes. A T4A recipient does not complete a TD1, and adding one to payroll can create CPP and EI liabilities. See why payroll taxes quietly drag on Canadian business growth.
• →Using an outdated 2025 form for a 2026 hire. The 2026 versions took effect for pay received on or after January 1, 2026.

❓ Frequently asked questions

The 2026 TD1 changes are a numbers refresh, not a rule change. Ontario employees who fill in Line 1 correctly and update the form when life changes rarely have to think about it again. Employers who collect, verify, retain, and remit on schedule stay out of the CRA’s payroll-audit lane.

Sources & references

1. 1.TD1ON 2026 Ontario Personal Tax Credits Return — Canada Revenue Agency — https://www.canada.ca/en/revenue-agency/services/forms-publications/td1-personal-tax-credits-returns/td1-forms-pay-received-on-january-1-later/td1on.html
2. 2.TD1 2026 Personal Tax Credits Return (federal) — Canada Revenue Agency — https://www.canada.ca/en/revenue-agency/services/forms-publications/td1-personal-tax-credits-returns/td1-forms-pay-received-on-january-1-later/td1.html
3. 3.TD1 Forms for 2026 (index) — Canada Revenue Agency — https://www.canada.ca/en/revenue-agency/services/forms-publications/td1-personal-tax-credits-returns/td1-forms-pay-received-on-january-1-later.html
4. 4.Payroll — Canada Revenue Agency — https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll.html
5. 5.Get the completed TD1 forms from the individual — Canada Revenue Agency — https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/payroll-deductions-contributions/completing-td1-personal-tax-credits-return/get-completed-td1-forms.html
6. 6.Books and records retention — Canada Revenue Agency — https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/keeping-records.html