Tax changes for Canadian residents in 2026

In 2026, Canadians can expect numerous tax changes affecting income tax rates, benefit amounts, contribution limits, and tax credits.

These changes are due to inflation indexing and new measures introduced in the 2025 federal budget. Below is a complete overview of the major changes taking effect in 2026.

Contents

• Federal Tax Rates and Income Brackets
• Family Benefits and Child Support
• Support for People with Disabilities
• Medical and Housing Tax Credits
• Canada and Quebec Pension Plans
• Employment Insurance
• Tax-Advantaged Savings Plans
• Corporate Taxes and Small Business
• Repealed Taxes

Federal Tax Rates and Income Brackets

Lower Minimum Tax Rate

The minimum federal income tax rate is dropping from 14.5% to 14% in 2026. This means the first tax bracket is now entirely taxed at 14%, reducing the tax burden on middle-class incomes.

Indexed Tax Brackets

All five federal tax brackets have been indexed by 2.0% for inflation in 2026. As a result, the income thresholds for each bracket have increased.

Federal tax brackets for 2026:

• 14% on income up to $58,523 CAD (was 14.5% up to $57,375 CAD in 2025)
• 20.5% on income from $58,523 CAD to $117,045 CAD (was $57,375 CAD to $114,750 CAD in 2025)
• 26% on income from $117,045 CAD to $181,440 CAD (was $114,750 CAD to $177,882 CAD in 2025)
• 29% on income from $181,440 CAD to $258,482 CAD (was $177,882 CAD to $253,414 CAD in 2025)
• 33% on income over $258,482 CAD (was over $253,414 CAD in 2025)

These higher thresholds ensure taxpayers maintain their purchasing power with 2% inflation.

Basic Personal Amount

The federal basic personal amount — the income an individual can earn without paying taxes — has been indexed for 2026.

In 2026, the maximum basic personal amount is $16,452 CAD compared to $16,129 CAD in 2025. Canadians don't pay federal tax on their first $16,452 CAD of income.

The number of people wanting to join the Cana...

China offers Canada joint production of elect...

Trump stripped Canada of its seat on the pres...

Canadians rallied around Prime Minister Carne...

Arctic cold has covered Canada with temperatu...

Trump lashed out at Carney after his speech i...

Canadian companies plan to raise salaries by ...

Gold breaks records and continues to rise des...

Prime Minister Carney concludes a nine-day wo...

Cenovus Energy is preparing to sell assets in...

Carney in Davos declared the breakdown of the...

German submarine manufacturer prepares multi-...

The full credit of $16,452 CAD (worth $2,303 CAD in tax savings at the 14% rate) applies to individuals with net income up to $181,440 CAD.

For higher incomes, the basic personal amount gradually decreases. Taxpayers with net income of $258,482 CAD and above receive the minimum basic personal amount of $14,829 CAD in 2026.

Non-Refundable Credits (Supplementary Credit)

To ensure no one loses out from the lower minimum tax rate, the 2025 budget introduced a temporary supplementary tax credit from 2025 through 2030.

It maintains the credit rate at 15% on the portion of credits exceeding the first bracket threshold.

In rare cases (such as very large medical credits or tuition credits), this supplement prevents a taxpayer's credit value from decreasing.

Charitable Donation Tax Credit

Federal charitable donation tax credit rates are adjusted to reflect the new tax brackets.

In 2026, donations up to $200 CAD will receive a 14% credit (down from 14.5% in 2025). Donations over $200 CAD still receive a 29% federal credit.

Annual donation limit: you can claim charitable donations up to 75% of net income with a five-year carryforward period for unused donations.

Family Benefits and Child Support

Canada Child Benefit

The Canada Child Benefit, a tax-free monthly payment to families, has been indexed by 2.0% for the benefit period from July 2026 to June 2027.

Starting July 2026, the maximum annual benefit will increase to $8,157 CAD per child under 6 years old (about $679.75 CAD per month). That's an increase of $160 CAD per year compared to 2025.

For children aged 6 to 17, the maximum benefit will increase to $6,883 CAD per year (about $573.58 CAD per month). The difference from 2025 is $135 CAD.

Income Thresholds for Child Benefit

Income thresholds for benefit phase-out are also higher: the first threshold will be $38,237 CAD of family net income, and the second threshold will be $82,847 CAD.

Families with income below $38,237 CAD receive the maximum benefit. Families with income above this amount will see benefit reductions when exceeding these thresholds.

Child Disability Benefit

For families raising a child with a disability, the child disability benefit supplement is also indexed.

For the 2026-2027 benefit period, the maximum benefit will be $3,480 CAD per year for each eligible child ($290 CAD per month). That's an increase of $69 CAD compared to 2025.

This supplement is paid to families of children who qualify for the disability tax credit.

Support for People with Disabilities

In addition to helping families, support for people with disabilities is expanding in 2026.

Disability Tax Credit

Disability tax credit amounts have been indexed for 2026. The federal base disability tax credit amount for 2025 was $9,872 CAD (with an additional $5,758 CAD supplement for children with disabilities under 18).

In 2026, these amounts will be slightly higher after indexing (approximately a 2% increase). Provincial disability tax credit amounts vary by province and are also indexed.

Qualifying for the disability tax credit remains important because it opens access to other types of support, such as the new Canada Disability Benefit.

Canada Disability Benefit

The major new support measure, the Canada Disability Benefit, began in July 2025 as a monthly payment to low-income working-age adults with disabilities.

Eligible individuals (ages 18 and older with a valid disability tax credit certificate) can receive up to $200 CAD per month ($2,400 CAD per year) under this program.

For July 2026, an increase of approximately 2% is expected (if inflation remains around 2%), which could raise the maximum to about $204 CAD per month.

Help with Disability Certification

To help people access this benefit, the 2025 budget included a one-time $150 CAD supplement to cover the costs of obtaining or renewing a disability tax credit certificate.

This payment will be provided for each new certification or recertification. Payment is expected by the end of 2026-2027.

Tax Credit for Personal Support Workers

A new refundable credit for certain healthcare workers is being introduced. The temporary personal support worker tax credit will apply for tax years 2026 through 2030.

Eligible personal support workers can receive a credit equal to 5% of their eligible employment income, up to a maximum credit of $1,100 CAD per year.

This credit is designed to supplement the earnings of personal support workers, recognizing their important role.

Who Can Get the Personal Support Worker Credit

The credit is available to people working in patient care positions: providing hands-on care for someone's health, safety, or daily needs under the direction of a health professional or facility.

This includes personal support workers, health care aides, or similar roles in hospitals, long-term care facilities, or home care settings.

Personal support workers from British Columbia, Newfoundland and Labrador, and the Northwest Territories are excluded, since these regions have their own wage top-ups.

The credit will be claimed on annual tax returns starting in 2026 and is refundable (even if you don't pay tax, you can get the credit as cash).

Medical and Home Accessibility Tax Credits

Medical Expense Tax Credit

The medical expense tax credit threshold is indexed for 2026. You can claim medical expenses on your tax return to the extent they exceed the lesser of $2,890 CAD or 3% of net income in 2026.

In 2025, this threshold was the lesser of $2,834 CAD or 3% of net income.

How the threshold works in practice:

1. Income $60,000 CAD: 3% = $1,800 CAD — this threshold applies
2. Income $80,000 CAD: 3% = $2,400 CAD — this threshold applies
3. Income $100,000 CAD: 3% = $3,000 CAD — the fixed amount of $2,890 CAD applies

Only medical expenses above the threshold can be claimed for the 15% federal credit.

Important Change: Double-Dipping Ban

Historically, certain home renovation expenses could be claimed under both the medical expense tax credit and the home accessibility tax credit.

Starting in 2026, this double-dipping is no longer allowed. Any given expense can be claimed either as a medical expense credit or for the home accessibility tax credit, but not both.

Budget 2025 closed this loophole, so 2025 is the last tax year when you could claim the same qualifying renovation under both credits.

Home Accessibility Tax Credit

The home accessibility tax credit itself remains available for seniors and those eligible for the disability tax credit.

You can claim renovation work (up to $20,000 CAD in expenses) that improves accessibility or safety in the home. The credit rate is 15%, for a maximum federal credit of $3,000 CAD.

Tip: if you had major qualifying renovations in 2025, make sure you claim them under both the home accessibility tax credit and the medical expense tax credit on your 2025 return, since this double-claiming won't be allowed for 2026 and beyond.

Canada and Quebec Pension Plans

Canada Pension Plan: Base Contributions

Canada Pension Plan contribution rates remain unchanged for 2026: employees and employers each contribute 5.95% of pensionable earnings, and self-employed individuals contribute a combined 11.9%.

However, the maximum annual pensionable earnings increase to $74,600 CAD in 2026 (compared to $71,300 CAD in 2025). The 4.6% increase in the earnings ceiling means higher-income workers will contribute on a larger portion of their salary.

The basic exemption remains at $3,500 CAD. The maximum base Canada Pension Plan payment in 2026 increases to $4,230.45 CAD for employees (and equally for employers).

A self-employed person will contribute up to $8,460.90 CAD in 2026 for the base Canada Pension Plan.

Canada Pension Plan: Additional Contributions

Since 2019, the Canada Pension Plan has had an additional component for higher earners. For 2026, the second earnings ceiling is set at $85,000 CAD.

Earnings above the regular maximum pensionable earnings ($74,600 CAD) up to $85,000 CAD are subject to an additional 4% contribution (employer and employee, each). Self-employed individuals pay 8% on this range.

This results in an additional maximum payment of $416 CAD for employees (and $416 CAD for employers) in 2026. The maximum additional contribution for self-employed is $832 CAD.

Combining base and additional components, a self-employed person will contribute a total of $9,292.90 CAD.

Tax Treatment of Canada Pension Plan Contributions

Base Canada Pension Plan contributions still receive a non-refundable credit (15% on the portion up to the base rate equivalent), while additional contributions are tax deductible.

In 2026, of the maximum base payment of $4,230.45 CAD, about $3,519 CAD is eligible for the credit, and the remainder (roughly $711 CAD) is deductible, while the full $416 CAD additional contribution is deductible.

Quebec Pension Plan: Rate Reduction

Quebec runs its own pension plan. The big change for 2026: the Quebec Pension Plan base contribution rate is decreasing for the first time.

In 2025, employees and employers each paid 5.4% into the base Quebec Pension Plan. For 2026, the base rate drops to 5.3% on each side (10.6% for self-employed).

The 0.1% reduction was made possible by the strong actuarial position of the Quebec Pension Plan fund. An employee earning $60,000 CAD will pay $56.50 CAD less in 2026, and their employer will save the same amount.

Maximum Quebec Pension Plan Contributions

The Quebec Pension Plan maximum pensionable earnings for 2026 are the same as the Canada Pension Plan — $74,600 CAD. Quebec also has an additional enhancement: the total employee rate is 6.30%.

The maximum Quebec Pension Plan contribution per employee for 2026 is $4,479.30 CAD (with the $3,500 CAD exemption).

A second additional tier also applies to earnings up to $85,000 CAD at a 4% rate, adding another $416 CAD maximum.

Quebec employees will contribute up to $4,895.30 CAD in total (base $4,479.30 CAD plus $416 CAD), and self-employed up to $9,790.60 CAD in 2026.

Quebec Parental Insurance Plan: Significant Reduction

Quebec's parental leave program sees a major premium cut in 2026. An 8% reduction was initially planned, but updated projections allowed for a 13% rate decrease.

As of January 1, 2026, premium rates are 0.430% of insurable earnings for employees, 0.602% for employers, and 0.764% for self-employed.

The Quebec Parental Insurance Plan maximum insurable earnings for 2026 are set at $103,000 CAD.

The maximum payment is about $442.90 CAD for an employee (0.430% of $103,000 CAD) and $620.06 CAD per employer per employee.

A self-employed person in Quebec will pay both portions, roughly $1,062.96 CAD maximum. The reduction is about $113 CAD compared to 2025.

Savings for Quebec Workers

Combining the Quebec Pension Plan and Quebec Parental Insurance Plan changes, Quebec employees can save up to roughly $137 CAD in 2026, and Quebec self-employed individuals up to roughly $259 CAD in contributions.

These reductions put more money back in workers' pockets while still fully funding the plans.

Employment Insurance

Employment Insurance Premiums (Federal)

Employment Insurance premiums are going down slightly for 2026. For workers outside Quebec, the premium rate will be $1.63 CAD per $100 CAD of insurable earnings in 2026, compared to $1.64 CAD in 2025.

Employers pay 1.4 times the employee rate, which comes to $2.28 CAD per $100 CAD. The maximum insurable earnings increase by 4.9% to $68,900 CAD.

As a result, even with the lower rate, the higher ceiling means the maximum annual premium goes up slightly: an employee will pay up to $1,123.07 CAD in 2026. That's a difference of $45.59 CAD from 2025.

Each employer maximum per employee increases to $1,572.30 CAD. The increase from 2025 is $63.83 CAD.

Employment Insurance in Quebec

Quebec has its own parental insurance plan, so Quebec residents pay a reduced Employment Insurance rate.

In 2026, Quebec's Employment Insurance rate for workers drops to $1.30 CAD per $100 CAD (from $1.31 CAD in 2025). Quebec employers will pay $1.82 CAD per $100 CAD.

The maximum Employment Insurance premium in Quebec for 2026 will be $895.70 CAD for an employee. The difference from 2025 is $35.03 CAD. The employer maximum per employee is $1,253.98 CAD.

Tax-Advantaged Savings Plans

Tax-Free Savings Account

The 2026 contribution limit stays at $7,000 CAD — the same annual limit as in 2023, 2024, and 2025.

The cumulative contribution room available to someone who's been eligible since 2009 (and never contributed) will reach $109,000 CAD as of January 1, 2026.

In 2026, the limit holds steady despite inflation. Tax-Free Savings Account limits increase in $500 CAD increments only when inflation warrants it.

Registered Retirement Savings Plan

The Registered Retirement Savings Plan limit is indexed to wage growth. For the 2026 tax year, the maximum contribution limit will be $33,810 CAD (compared to $32,490 CAD for 2025 contributions).

As usual, you can contribute up to 18% of your previous year's earned income, up to this dollar maximum.

This higher limit reflects rising incomes and lets those with sufficient earnings shelter more money in their Registered Retirement Savings Plan.

First Home Savings Account

The First Home Savings Account keeps its limits for 2026: an annual contribution limit of $8,000 CAD and a lifetime limit of $40,000 CAD.

Unused First Home Savings Account room can be carried forward, up to $8,000 CAD of carry-forward per year.

Example: if you contributed $5,000 CAD in 2025, in 2026 you can contribute $11,000 CAD ($3,000 CAD carry-forward plus $8,000 CAD new room). However, the maximum contribution in any single year is capped at $16,000 CAD.

The First Home Savings Account continues to be a valuable tool for first-time homebuyers, offering deductions on contributions and tax-free withdrawals for purchasing a home.

Home Buyers' Plan

The Home Buyers' Plan withdrawal limit remains at $60,000 CAD (per person) for withdrawals in 2026.

A first-time homebuyer can withdraw up to $60,000 CAD from their Registered Retirement Savings Plan to use toward buying a home (or $120,000 CAD for a couple if both qualify).

The withdrawn amount must be repaid to the Registered Retirement Savings Plan over 15 years. Funds must be in the Registered Retirement Savings Plan for at least 90 days before withdrawal to qualify.

Corporate Taxes and Small Business

Federal Corporate Tax Rates

The general federal corporate tax rate remains at 15% on active business income. The federal tax rate for small business stays at 9% on the first $500,000 CAD of active business income for Canadian-controlled private corporations.

The 2025 budget included no federal proposals to change corporate tax rates.

Provincial Small Business Tax in Nova Scotia

Nova Scotia rolled out significant small business tax breaks in 2025. As of April 1, 2025, Nova Scotia lowered its small business corporate income tax rate from 2.5% to 1.5%.

The province also raised the small business income threshold from $500,000 CAD to $700,000 CAD. In 2026, a private corporation in Nova Scotia will pay only 1.5% provincial tax on its first $700,000 CAD of active income.

Income above $700,000 CAD is taxed at Nova Scotia's general rate (14%). These changes make Nova Scotia's small business tax one of the lowest in Canada.

Nova Scotia HST Reduction

Nova Scotia cut its provincial portion of the Harmonized Sales Tax from 10% to 9% in 2025, bringing the combined sales tax down to 14%.

This took effect April 1, 2025. By 2026, Nova Scotians pay 14% HST, the lowest in Canada.

Provincial Tax Indexing

Most provinces index their tax brackets and credits annually for inflation, though rates typically stay the same.

For example, Quebec indexed its personal income tax brackets by 2.05% for 2026. Quebec's provincial tax rates remain at 15%, 20%, 24%, and 25.75% for its four brackets, but the income thresholds for each are 2.05% higher than in 2025.

Other provinces have indexation factors around 1.6%-2.2% for 2026 (for example, Ontario 1.9%, British Columbia 2.2%). These inflation adjustments prevent bracket creep in provincial taxes.

Quebec Payroll Taxes

In addition to the Quebec Pension Plan and Quebec Parental Insurance Plan, Quebec also announced a temporary employer Health Services Fund holiday for the agriculture, forestry, fishing, and hunting sectors for 2026 and 2027.

Eligible employers in these industries won't pay the 4% payroll tax for those two years, provided at least 50% of their payroll is in the designated sectors.

For most employers, Health Services Fund rates for 2026 are unchanged (still 1.65%-4.26% depending on payroll size).

Cancelled Canadian Entrepreneurs' Incentive

The Canadian Entrepreneurs' Incentive, which was proposed in the 2022 budget to reduce capital gains tax on certain small business share sales, won't be happening.

The 2025 budget announced that the Canadian Entrepreneurs' Incentive (which would have provided a special capital gains deduction on up to $2,000,000 CAD of lifetime gains) is cancelled.

The Lifetime Capital Gains Exemption for qualified small business shares was recently increased and remains available for business owners.

Repealed Taxes

Underused Housing Tax Repeal

The federal Underused Housing Tax — an annual 1% tax on vacant or underused residential property owned by non-residents or certain entities — is repealed starting with the 2025 calendar year.

Budget 2025 proposed eliminating the Underused Housing Tax from 2025 onward, citing implementation challenges and fairness concerns.

No Underused Housing Tax forms or payments will be required for 2025 and beyond. Owners who would have been subject to it in 2025 can relax — there's no tax due for 2025 and none going forward.

However, Underused Housing Tax requirements for 2022, 2023, and 2024 remain in effect. The government is not refunding past payments, and any penalties for failing to file for those years still apply.

Luxury Tax on Aircraft and Boats Repealed

The federal luxury tax on certain high-value goods is being partially rolled back. Budget 2025 announced the repeal of the luxury tax on aircraft and boats, effective the day after the budget (November 5, 2025).

Previously, since September 2022, a 10% tax (or 20% of the value above the threshold) applied to new personal aircraft over $100,000 CAD and boats/yachts over $250,000 CAD.

As of November 2025, new sales/imports of aircraft and boats are no longer subject to this luxury tax. This is welcome news for industries selling these items and for buyers of private planes or luxury boats.

Luxury Tax on Cars Remains

Important: the luxury tax on cars is not repealed. High-end vehicles priced above $100,000 CAD will continue to be taxed going forward. The repeal only affects aircraft and boats.

The change is estimated to reduce government revenue by approximately $135,000,000 CAD over five years. The rationale was to support domestic shipbuilding and aerospace industries.

Goods and Services Tax Credit

The Goods and Services Tax / Harmonized Sales Tax credit returns to normal indexation. For the payment period from July 2026 to June 2027, the maximum GST credit for a single adult will be $543 CAD, for a couple $712 CAD, plus $187 CAD per child.

This is inflation indexation, helping low— and modest-income Canadians cope with rising costs.

Conclusion

Overall, 2026 brings broad tax relief: a lower starting tax rate, higher tax brackets and credit amounts, and more generous child benefits.

All of this is mainly thanks to indexation and recent policy moves. Working Canadians will also notice lower pension contributions and employment insurance premiums in Quebec.

Small businesses, especially in Nova Scotia, benefit from tax reductions, while targeted measures (such as the credit for personal support workers and disability support) provide help where it's needed.

At the same time, some burdensome taxes (the Underused Housing Tax and the luxury tax on aircraft and boats) are being eliminated, making life simpler for those affected.

All these changes were passed through the 2025 federal budget and corresponding legislation, so Canadians can plan with confidence for the 2026 tax year.