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Canadian Tax Rates and Limits for 2026
These are the Canadian tax rates for 2026 that matter most if you live or run a business in Ontario: federal and Ontario brackets, corporate rates, RRSP, TFSA and FHSA limits, CPP and EI, dividend credits, capital gains and GST/HST. Each table links to its official source. Figures marked “derived” are our own arithmetic from official numbers. We checked every figure on October 2, 2026. Budget 2026, due this fall, may change some of them, and we’ll update this page if it does.
Federal tax brackets for 2026
Federal brackets rose 2.0% for inflation in 2026, and the lowest rate is 14% for the full year. In 2025 it was a blended 14.5%, because the cut from 15% took effect on July 1, 2025. Each rate applies only to the slice of taxable income inside its bracket.
| 2026 federal figure | Rate or amount |
|---|---|
| Taxable income up to $58,523 | 14% |
| $58,523.01 to $117,045 | 20.5% |
| $117,045.01 to $181,440 | 26% |
| $181,440.01 to $258,482 | 29% |
| Over $258,482 | 33% |
| Basic personal amount, net income of $181,440 or less | $16,452 |
| Basic personal amount, net income of $258,482 or more | $14,829 |
The basic personal amount shrinks gradually from $16,452 to $14,829 as net income rises from $181,440 to $258,482. Most federal non-refundable credits, including this one, are worth 14% of the amount in 2026. A temporary Top-Up Tax Credit (2025 to 2030) keeps a 15% rate on certain credit amounts above $58,523.
Sources: CRA: Current year tax rates and income brackets (2026), CRA: Indexation adjustment for personal income tax and benefit amounts, Finance Canada: Delivering a middle-class tax cut and Finance Canada: Report on the lowest tax rate and non-refundable credits.
Want these brackets applied to your own return? See our personal tax services.
Ontario tax brackets, surtax and health premium
Ontario’s indexing factor for 2026 is 1.9%. On top of its brackets, Ontario charges a surtax once your basic Ontario tax passes $5,818, and the Ontario Health Premium, which is collected through payroll deductions or your tax return.
| 2026 Ontario figure | Rate or amount |
|---|---|
| Taxable income up to $53,891 | 5.05% |
| $53,891.01 to $107,785 | 9.15% |
| $107,785.01 to $150,000 | 11.16% |
| $150,000.01 to $220,000 | 12.16% |
| Over $220,000 | 13.16% |
| Basic personal amount | $12,989 |
| Surtax | 20% of basic Ontario tax over $5,818, plus 36% of basic Ontario tax over $7,446 (56% in total above $7,446) |
| Ontario Health Premium | $0 to $900, based on taxable income (tiers below) |
Ontario Health Premium for 2026, based on taxable income:
- $20,000 or less: $0
- Over $20,000 up to $36,000: 6% of income over $20,000, to a maximum of $300
- Over $36,000 up to $48,000: $300 plus 6% of income over $36,000, to a maximum of $450
- Over $48,000 up to $72,000: $450 plus 25% of income over $48,000, to a maximum of $600
- Over $72,000 up to $200,000: $600 plus 25% of income over $72,000, to a maximum of $750
- Over $200,000: $750 plus 25% of income over $200,000, to a maximum of $900 (reached at $200,600)
Sources: CRA: Current year tax rates and income brackets (2026), CRA: T4032-ON payroll deductions tables, January 2026 and Ontario: Health premium.
Corporate tax rates for 2026
Ontario cut its small business rate from 3.2% to 2.2% on July 1, 2026. Federal rates are unchanged from 2025. The small business rate applies to the first $500,000 a year of active business income earned by a Canadian-controlled private corporation (CCPC). Active business income above that is taxed at the general rate.
| 2026 rate | Federal | Ontario | Combined (derived) |
|---|---|---|---|
| Small business rate, January 1 to June 30, 2026 | 9% | 3.2% | 12.2% |
| Small business rate, from July 1, 2026 | 9% | 2.2% | 11.2% |
| Small business rate, tax year ending December 31, 2026 | 9% | About 2.70% (derived) | About 11.70% |
| General rate | 15% | 11.5% | 26.5% |
We got the combined rates by adding the federal and Ontario rates; no government page publishes them. A tax year that straddles July 1, 2026 uses an Ontario rate prorated by days. For a December 31 year-end, that is 181 days at 3.2% and 184 days at 2.2%.
- Business limit: $500,000 a year, federally and in Ontario. Associated corporations share one limit, and it shrinks when taxable capital employed in Canada was between $10 million and $50 million in the previous year.
- Passive income grind (federal only): the federal business limit drops by $5 for every $1 of passive investment income (adjusted aggregate investment income) over $50,000, and reaches zero at $150,000. Ontario does not follow this rule, so a corporation can lose the federal small business rate on some income and keep Ontario’s.
When we checked on October 2, 2026, the CRA’s corporation tax rates table still showed Ontario’s lower rate as 3.2%. Ontario’s own page shows the July 1 cut.
Sources: CRA: Corporation tax rates, Ontario: Corporate income tax, 2026 Ontario Budget, annex and CRA: T2 guide, small business deduction.
To see what these rates mean for your pay, try our salary vs dividend calculator. For help with the return itself, see our T2 corporate tax return service.
RRSP, TFSA and FHSA limits
Here are the 2026 limits for the three main registered plans, plus the 2027 RRSP limit, which the CRA has already published. The CRA had not published a 2027 TFSA limit when we checked on October 2, 2026.
| Plan | Limit | How it works |
|---|---|---|
| RRSP, 2026 | $33,810 | Your room is 18% of your 2025 earned income, up to $33,810, minus any pension adjustment, plus unused room carried forward from earlier years. |
| RRSP, 2027 | $35,390 | Based on 18% of your 2026 earned income. Salary counts as earned income; dividends do not. |
| TFSA, 2026 | $7,000 | Unused room carries forward, and amounts you withdraw are added back to your room on January 1 of the next year. |
| TFSA, total since 2009 | $109,000 (derived) | For someone who has been 18 or older and resident in Canada every year since 2009 and has never contributed. This is our sum of the CRA’s annual limits. |
| FHSA, yearly | $8,000 | Once you have opened an FHSA, up to $8,000 of unused room carries forward, so the most room you can have in one year is $16,000 (derived). Contributions are deductible. |
| FHSA, lifetime | $40,000 | Counts all of your FHSA contributions and any transfers from your RRSPs. |
The RRSP deadline for the 2026 tax year should be Monday, March 1, 2027, the 60th day of 2027. That date is derived from the CRA’s rule; the CRA had not posted it yet. Our Canadian tax deadlines page lists every date for the 2026 tax year.
Sources: CRA: RRSP, TFSA and other registered plan limits, CRA: How contributions affect your RRSP deduction limit, CRA: RRSPs and Other Registered Plans for Retirement (T4040), CRA: RRSP contribution year, CRA: Calculate your TFSA room, CRA: TFSA dollar limits by year, CRA: Contributing to your FHSA and CRA: FHSA tax tip.
CPP and EI for 2026
Employees and employers each pay CPP on earnings between the $3,500 basic exemption and the $74,600 ceiling, and CPP2 on earnings from $74,600 to $85,000. Self-employed people pay both shares of CPP. They pay EI only if they sign an agreement to get EI special benefits.
| 2026 figure | Employee | Employer | Self-employed |
|---|---|---|---|
| CPP rate, earnings from $3,500 to $74,600 | 5.95% | 5.95% | 11.9% (both shares, derived) |
| CPP maximum | $4,230.45 | $4,230.45 | $8,460.90 |
| CPP2 rate, earnings from $74,600 to $85,000 | 4% | 4% | 8% (both shares, derived) |
| CPP2 maximum | $416 | $416 | $832 |
| CPP and CPP2 maximum (derived) | $4,646.45 | $4,646.45 | $9,292.90 |
| EI rate, insurable earnings up to $68,900 | 1.63% | 1.4 times the employee premium | 1.63%, only if you opt in |
| EI maximum | $1,123.07 | $1,572.30 | $1,123.07, only if you opt in |
The 5.95% CPP rate is the 4.95% base rate plus the 1% first additional contribution. For 2027, the CRA has already published EI figures: maximum insurable earnings of $70,800, an employee rate of 1.64%, and maximum premiums of $1,161.12 for employees and $1,625.57 for employers. It had not published 2027 CPP figures when we checked, and we’ll add them when it does.
Sources: CRA: CPP contribution rates, maximums and exemptions, CRA: CPP2 rates and maximums, CRA: Canada Pension Plan deductions, CRA: EI premium rates and maximums and Government of Canada: EI premiums for self-employed people.
If you run payroll, our payroll services cover source deductions, remittances and T4 slips.
Dividend and capital gains rates
Dividends from Canadian corporations are grossed up on your return, then reduced by federal and Ontario dividend tax credits that recognize the tax the corporation has already paid. Eligible dividends generally come from income taxed at the general corporate rate. Non-eligible dividends come from income that wasn’t, such as income taxed at the small business rate.
| 2026 item | Rate or amount |
|---|---|
| Eligible dividends: gross-up | 38% (you report 138% of the dividend) |
| Eligible dividends: federal dividend tax credit | 15.0198% of the grossed-up dividend |
| Eligible dividends: Ontario dividend tax credit | 10% of the grossed-up dividend |
| Non-eligible dividends: gross-up | 15% (you report 115% of the dividend) |
| Non-eligible dividends: federal dividend tax credit | 9.0301% of the grossed-up dividend |
| Non-eligible dividends: Ontario dividend tax credit | 2.9863% of the grossed-up dividend in 2026, falling to 1.9863% on January 1, 2027 |
| Capital gains inclusion rate | 50% (half of a capital gain is taxable) |
| Lifetime capital gains exemption | $1,275,000 of gains on qualified small business corporation shares or qualified farm or fishing property (a deduction of up to $637,500) |
The proposed increase in the capital gains inclusion rate to two-thirds was cancelled, and Budget 2025 confirmed the government would not proceed with it. The lifetime capital gains exemption’s $1.25 million base is now law, and it is indexed to $1,275,000 for 2026.
Ontario says its 2027 cut to the non-eligible dividend credit lines up with its lower small business rate, so the personal tax on small business dividends goes up from 2027. If you pay yourself from a corporation, see our tax planning for incorporated business owners.
Sources: CRA: Lines 12000 and 12010, taxable dividends, CRA: Completing the T5 slip, Ontario: Ontario dividend tax credit, Finance Canada: Report on Federal Tax Expenditures 2026, CRA: What’s new for corporations, CRA: Indexation adjustment for 2026 and CRA: Line 25400, capital gains deduction.
GST/HST threshold and Ontario rate
You generally have to register for GST/HST once your taxable sales pass the small supplier threshold. Below it, registering is optional.
| Item | 2026 figure or rule |
|---|---|
| Small supplier threshold | $30,000 of worldwide taxable supplies (including those of associated persons), measured in a single calendar quarter or over the last four consecutive calendar quarters |
| Threshold for public service bodies | $50,000 |
| Not counted toward the threshold | Sales of capital property, financial services and goodwill |
| Over $30,000 in a single quarter | You must charge GST/HST starting with the sale that put you over, and register within 29 days of that sale |
| Over $30,000 across four quarters, but not in one | You stay a small supplier for those quarters and the month after, then must register within 29 days of your first sale after that |
| Ontario HST rate | 13% |
| GST rate in provinces without HST, such as Alberta | 5% |
Sources: CRA: General Information for GST/HST Registrants (RC4022) and CRA: GST/HST rates calculator.
Need to register or file? Our GST/HST registration and filing service handles both.
Want these numbers applied to you?
A rates table tells you the rate. It can’t tell you whether to take salary or dividends, how much to put in your RRSP, or whether your corporation is near the passive income limit. Book a free intro call and we’ll go through your numbers with you, at our Westboro office in Ottawa or remotely from anywhere in Canada.
2026 Tax Rates FAQ
What are the federal tax brackets for 2026?
Federal tax is 14% on the first $58,523 of taxable income, 20.5% on income from $58,523.01 to $117,045, 26% up to $181,440, 29% up to $258,482 and 33% above $258,482. The brackets rose 2.0% for inflation, and the 14% bottom rate now applies for the full year.
What is Ontario's small business tax rate in 2026?
Ontario’s small business rate is 3.2% until June 30, 2026 and 2.2% from July 1, 2026. With the 9% federal rate, the combined rate is 12.2% before July 1 and 11.2% after (derived). A corporation whose tax year straddles July 1 uses an Ontario rate prorated by days, which works out to about 11.7% combined for a December 31, 2026 year-end (derived).
How much can I contribute to an RRSP, TFSA or FHSA for 2026?
For an RRSP, 18% of your 2025 earned income, up to $33,810, less any pension adjustment, plus unused room from earlier years. For a TFSA, $7,000 of new room plus any unused room and past withdrawals. For an FHSA, $8,000 a year, or up to $16,000 with carried-forward room (derived), to a lifetime limit of $40,000.
What are the maximum CPP and EI contributions for 2026?
An employee pays up to $4,230.45 of CPP, $416 of CPP2 and $1,123.07 of EI. The employer matches the CPP and CPP2 and pays up to $1,572.30 of EI. A self-employed person pays both shares of CPP and CPP2, up to $9,292.90 in total (derived), and pays EI only after opting in to EI special benefits.
Is the capital gains inclusion rate still 50% in 2026?
Yes. Half of a capital gain is taxable in 2026, because the proposed increase to two-thirds was cancelled. If you sell qualified small business corporation shares or qualified farm or fishing property, the lifetime capital gains exemption can shelter up to $1,275,000 of eligible gains over your lifetime.
Guides that put these numbers to work
Go deeper with these guides from the BBA Tax blog:
- Corporate Tax Rates in Canada 2026: Federal and Ontario Guide
- Dividend Tax in Canada: How Dividends Are Taxed in 2026
- Lifetime Capital Gains Exemption 2026: How to Shelter $1.275 Million When You Sell Your Business
- RRSP vs TFSA: Which Should You Contribute To in 2026?
- How to Set Up Small Business Payroll in Canada (2026 CRA Guide)
- 2026 Guide to GST/HST Registration: When You Must Register & How to File
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