Tax Changes in Canada
Follow important Canadian tax changes and understand how new CRA and federal tax rules may affect you.
The short version (as of October 2026)
- The lowest federal tax rate is 14% for all of 2026, down from 15% before July 2025.
- Federal brackets and most credits rose 2.0% for inflation. The basic personal amount is $16,452.
- The capital gains inclusion rate stays at one-half; the increase to two-thirds was cancelled.
- BC raised its lowest rate to 5.6%, PEI added a 20% bracket over $200,000, and Newfoundland and Labrador raised its basic personal amount.
- Nova Scotia's HST has been 14% since April 1, 2025.
- The GST/HST credit was renamed the Canada Groceries and Essentials Benefit in July 2026, and increased 25%.
Canadian Tax Changes: What's New for 2026
Tax rules change every year, usually by a few dollars and occasionally by a lot. We update this page when CRA, the Department of Finance or a province publishes something that actually changes a return. Announced but not yet law? We say so. Every number below also feeds our Canadian tax calculators, so they're never out of step with this page.
Federal Income Tax
Lowest rate down to 14%. The first federal bracket dropped from 15% to 14% effective July 1, 2025, so 2025 returns use a blended 14.5% and 2026 is the first full year at 14%. Because most non-refundable credits use the lowest rate, they're now worth 14% of the amount. A temporary Top-Up Tax Credit for 2025 to 2030 protects the small number of people whose credits exceed the first bracket. Details in our guide to Canadian tax credits.
Indexation of 2.0%. The 2026 brackets are $58,523, $117,045, $181,440 and $258,482, and the basic personal amount is $16,452 (reduced to $14,829 at high incomes). Full tables, province by province, are in our 2026 Canadian income tax brackets.
Other indexed amounts for 2026 include the age amount ($9,208), the disability amount ($10,341), the Canada employment amount ($1,501), the medical expense threshold ($2,890 or 3% of net income), and the Old Age Security recovery threshold ($95,323).
Savings Plans and CPP
- RRSP dollar limit: $33,810 for 2026.
- TFSA annual limit: $7,000 for 2026.
- CPP: maximum pensionable earnings $74,600, with CPP2 on earnings up to $85,000. See self-employed taxes for what that means if you pay both halves.
What do these changes mean for you?
Ask the assistant. It uses the same 2026 rules and runs the calculator with your income and province.
Capital Gains
Inclusion rate unchanged at one-half. The proposed increase to two-thirds was cancelled in March 2025. Lifetime capital gains exemption: $1,275,000 for 2026. Under proposed changes, the capital gains deferral for reinvesting in eligible small business shares was expanded for dispositions after 2024, and a capital gains deduction is available on qualifying sales of a business to employees through a worker cooperative. More in our guide to capital gains tax in Canada.
Provincial Changes for 2026
- British Columbia raised its lowest rate from 5.06% to 5.6% and its basic tax reduction from $575 to $690, for the full 2026 year (BC budget, February 17, 2026).
- Prince Edward Island added a 20% bracket on income over $200,000 for the full 2026 year (announced April 14, 2026).
- Newfoundland and Labrador raised its basic personal amount from $11,188 to $13,094 for the full 2026 year (announced April 29, 2026).
- Manitoba did not index its brackets for 2026.
Compare every province in our guide to provincial taxes in Canada.
Benefits
- The GST/HST credit is now the Canada Groceries and Essentials Benefit. It was renamed in July 2026, with the same eligibility rules and a 25% increase that runs from 2026 to 2031. A one-time top-up was paid on June 5, 2026. See Canadian tax credits.
GST/HST and Housing
- Nova Scotia HST dropped from 15% to 14% on April 1, 2025. See the GST/HST guide.
- Underused Housing Tax: since 2023, most Canadian owners don't file. The 2025 federal budget proposed eliminating the tax starting with the 2025 calendar year; we can't yet confirm it has become law, so check CRA's page if you're a foreign owner or hold property through a corporation, partnership or trust.
What We're Watching
Changes announced but not yet enacted get listed here only after the government publishes them, and we mark them “proposed” until they pass. If something here looks out of date, please tell us; we check every report against the source.
- Productivity Mega Deduction (announced October 1, 2026, proposed): the federal government says businesses will be able to immediately deduct the full cost of a much broader range of investments, including computer equipment and vehicles. Who qualifies and from what date hadn't been fully published when we checked. Until then, the existing capital cost allowance rules apply; see tools and equipment deductions.
Tax Changes Questions
What is the lowest federal tax rate in Canada for 2026?
14%, on taxable income up to $58,523. It was 15% until July 1, 2025.
Did the capital gains inclusion rate change?
No. The increase to two-thirds was cancelled in March 2025, and the rate remains one-half.
How much did tax brackets go up for 2026?
Federal brackets and most federal amounts were indexed by 2.0%.
What are the 2026 RRSP and TFSA limits?
$33,810 for the RRSP dollar limit and $7,000 for the TFSA annual limit.
What is the HST rate in Nova Scotia?
14%, since April 1, 2025.
Sources: CRA, 2026 indexation table; T4127 July 2026 edition (BC, NL and PEI changes); Department of Finance, lowest-rate report; CRA, New for capital gains; RC4058 (Nova Scotia 14%); Canada Groceries and Essentials Benefit. Manitoba indexation: EY tax alert on the Manitoba 2026 budget. Checked October 2026.
Last reviewed October 4, 2026 against CRA and Government of Canada sources. How we check our facts.