2026 Canadian tax update: every change, explained

Chapter 1

What changed for 2026

Most Canadians pay a little less federal tax in 2026. Here are the changes worth knowing, before we look at each one.

14%New lowest federal tax rate, for the full year

The year at a glance

The lowest federal tax rate is now 14%, down from 15%.
Tax brackets and the basic personal amount rose 2.0% for inflation. You owe no federal tax on the first $16,452.
The GST/HST credit became the Canada Groceries and Essentials Benefit, and it is 25% bigger from July 2026.
First-time buyers can get up to $50,000 of GST back on a new home.
You can save more: RRSP $33,810, TFSA $7,000, FHSA $8,000.

1.1The new 14% rate

The rate on the first slice of your income dropped from 15% to 14% in July 2025. 2026 is the first full year at 14%. The change became law on March 12, 2026 (Bill C-4).

Taxable income, 2026	Federal rate
$0 to $58,523	14%
$58,523 to $117,045	20.50%
$117,045 to $181,440	26%
$181,440 to $258,482	29%
Over $258,482	33%

2026 federal tax brackets

1.2Your tax-free amount and credits

Everyone can earn a basic personal amount tax-free. For 2026 it is $16,452, up from $16,129. It shrinks to $14,829 for incomes between $181,440 and $258,482.

Credits such as the basic personal amount, CPP, EI and the Canada employment amount are worth 14% of the amount claimed, the same as the lowest rate.

Chapter 2

Your paycheque: CPP and EI

CPP and EI come off every paycheque. The ceilings went up again for 2026, so higher earners see slightly larger deductions.

$4,646.45Most an employee pays into CPP and CPP2 in 2026

	2025	2026
CPP rate (employee)	5.95%	5.95%
CPP earnings ceiling	$71,300	$74,600
Maximum CPP	$4,034.10	$4,230.45
CPP2 ceiling	$81,200	$85,000
Maximum CPP2	$396.00	$416.00
EI rate (employee)	1.64%	1.63%
Maximum insurable earnings	$65,700	$68,900
Maximum EI	$1,077.48	$1,123.07

Outside Quebec

2.1Example: $90,000 in British Columbia

Worked example · Paid every two weeks in 2026

Gross pay: $3,461.54
Federal tax: −$432.75
BC tax: −$184.06
CPP and CPP2: −$178.71
EI: −$43.20
Take-home pay: $2,622.82

That is $68,193 a year. The next dollar you earn is taxed at 28.2%.

Once you pass the CPP and EI ceilings during the year, those deductions stop and your paycheques get a little bigger.

Chapter 3

Provincial tax

Your province adds its own tax on top of the federal tax. Here are the 2026 rates for British Columbia, Ontario and Alberta.

8%Alberta's lowest rate, on income up to $61,200

Province	Lowest rate	Tax-free amount
British Columbia	5.60%	$13,216
Ontario	5.05%	$12,989
Alberta	8.00%	$22,769

2026, first bracket and basic personal amount

Ontario also charges a surtax on higher provincial tax and an Ontario Health Premium of up to $900. BC and Ontario reduce tax for lower incomes.

3.1BC and Ontario brackets

British Columbia, 2026	Rate
$0 to $50,363	5.60%
$50,363 to $100,728	7.70%
$100,728 to $115,648	10.50%
$115,648 to $140,430	12.29%
$140,430 to $190,405	14.70%
$190,405 to $265,545	16.80%
Over $265,545	20.50%

Ontario, 2026	Rate
$0 to $53,891	5.05%
$53,891 to $107,785	9.15%
$107,785 to $150,000	11.16%
$150,000 to $220,000	12.16%
Over $220,000	13.16%

3.2Alberta brackets

Alberta, 2026	Rate
$0 to $61,200	8%
$61,200 to $154,259	10%
$154,259 to $185,111	12%
$185,111 to $246,813	13%
$246,813 to $370,220	14%
Over $370,220	15%

Alberta added its 8% bracket in 2025. It applies to the first $61,200 of taxable income in 2026.

Chapter 4

Saving: RRSP, TFSA and FHSA

Registered accounts are the simplest legal way to cut your tax. Each one works differently, so it pays to know which to use first.

$33,8102026 RRSP limit, up from $32,490

Account	2026 limit	Good to know
RRSP	$33,810	18% of 2025 earned income, due March 1, 2027
TFSA	$7,000	$109,000 total if eligible since 2009
FHSA	$8,000	$40,000 lifetime, for a first home
Home Buyers' Plan	$60,000	Borrow from your RRSP for a first home

4.1Which account first?

Worked example · An RRSP contribution at $90,000 in BC

Contribution: $5,000.00
Your marginal rate: 28.2%
Tax saved for 2026: $1,410

Buying your first home? Start with the FHSA: it is deductible like an RRSP and tax-free coming out.
Higher income now than in retirement? The RRSP usually wins.
Lower income, or saving for anything else? The TFSA is the most flexible.

Chapter 5

Families and benefits

Benefits are paid automatically when you file your return, so filing on time matters even if you have no income.

$8,157Most Canada Child Benefit per child under 6, July 2026 to June 2027

Canada Child Benefit	July 2026 to June 2027
Each child under 6	up to $8,157 a year
Each child aged 6 to 17	up to $6,883 a year
Reduced when family income passes	$38,237
Reduced faster above	$82,847

Based on 2025 family net income

Worked example · Two children under 6, $90,000 family income

Maximum for two children: $16,314
Income reduction: −$6,430
Canada Child Benefit: $823.66 a month

5.1The new Canada Groceries and Essentials Benefit

The GST/HST credit has a new name and is bigger. From July 2026 the quarterly payments are 25% higher for five years, and a one-time top-up was paid on June 5, 2026.

Who qualifies and how it is worked out have not changed. Payments arrive in July, October, January and April, based on your 2025 return.

5.2Old Age Security

If your 2026 net income is above $95,323, part of your OAS is paid back: 15 cents for every dollar over that amount.

Chapter 6

Homes, cars and business

New-home buyers get real money back in 2026, and the limits for writing off a work vehicle went up.

$50,000Most GST a first-time buyer can get back on a new home

The first-time home buyers' GST rebate became law in March 2026. It refunds all of the GST, or the federal part of HST, on a new home up to $1 million, and part of it up to $1.5 million.

New or substantially renovated homes only, not resale homes.
For agreements signed from March 20, 2025, and before 2031.
It must be your main home, and you cannot have claimed it before.

6.1Vehicles used for work

2026 CRA limit	Amount
Capital cost you can depreciate	$39,000
Zero-emission vehicles	$61,000
Deductible lease payments	$1,100 a month
Deductible loan interest	$350 a month

Before sales tax

6.2Interest rates

The Bank of Canada raised its policy rate to 2.50% on October 28, 2026, its first increase since 2023. The next decision is December 9, 2026.

Chapter 7

Coming next: Budget 2026

The federal budget tabled on November 5, 2026 proposes more changes. These are proposals, not law yet, and details may change.

One tax-filing deadline: May 15 for everyone, including the self-employed, starting with 2027 returns.
Business-income earners could make one instalment a year, due December 31.
A Canada Growth Incentive: up to $15 million of tax-free capital gains on qualifying shares.
An "RRSP for life" that merges the RRSP and RRIF.
The Canada Workers Benefit enhanced and renamed the Build Canada Workers Benefit.
A refundable caregiver credit, and a $1,200 flat amount for adoption expenses.

Chapter 8

Key dates

Put these in your calendar for the 2026 tax year.

Mar 15, Jun 15, Sep 15, Dec 15, 2026Quarterly tax instalments, if you pay them
Jul 2026New benefit year starts for the CCB and the Groceries and Essentials Benefit
December 9, 2026Next Bank of Canada rate decision
Dec 31, 2026Last day for 2026 donations, medical expenses and FHSA contributions
End of Feb 2027T4 and T5 slips arrive from employers and banks
March 1, 2027Last day for RRSP contributions that count for 2026
Apr 30, 2027File your 2026 return and pay any balance owing
Jun 15, 2027Filing deadline if you or your spouse are self-employed (balance still due Apr 30)

Chapter 9

Before you file

Gather these before you sit down to do your 2026 return.

T4 slips from every employer
T5, T3 and T5008 slips for interest, dividends and investment sales
RRSP and FHSA contribution receipts
Your 2025 Notice of Assessment, for your RRSP room
Receipts for medical expenses, donations and childcare
T2202 tuition slips
Form T2200 from your employer if you worked from home
Records of business or rental income and expenses
Your direct deposit and address up to date in CRA My Account

Glossary

Average tax rate: Your total tax divided by your total income.
Marginal tax rate: The tax on your next dollar of income.
Basic personal amount: The income everyone can earn before federal tax starts.
Non-refundable credit: Lowers the tax you owe, but not below zero.
Refundable credit: Paid to you even if you owe no tax.
YMPE: The CPP earnings ceiling: $74,600 in 2026.
YAMPE: The second, higher CPP2 ceiling: $85,000 in 2026.
Family net income: Your and your spouse's net income, used for benefits.
CCA: Capital cost allowance: tax depreciation on business assets.
Notice of Assessment: The CRA's summary of your return, including RRSP room.

Sources

General information, not tax advice. Work out your own numbers with our free calculators.