The 2026 Canadian tax landscape, at a glance.
A reference card you can hand to a CPA, an estate lawyer, or a corporate client — and have everyone working from the same numbers.
This guide consolidates the rates that matter most when planning around an incorporated business: corporate brackets (general & small business), personal marginal brackets by province, eligible vs. non-eligible dividend rates, the capital gains inclusion rate, and the indexed Lifetime Capital Gains Exemption (LCGE).
Federal personal brackets — 2026
The federal brackets are indexed annually. Provincial tax is layered on top — see the next section for combined top marginal rates.
| Taxable income | Federal rate |
|---|---|
| First ~$57,375 | 15.0% |
| ~$57,376 – $114,750 | 20.5% |
| ~$114,751 – $177,882 | 26.0% |
| ~$177,883 – $253,414 | 29.0% |
| Over ~$253,414 | 33.0% |
Bracket thresholds shown are 2026 CRA-indexed amounts; rounded for readability. Verify against current CRA published figures for filing.
Top combined marginal rates by province (2026)
These are the headline rates a HNW owner sees on the next dollar of ordinary employment or interest income at the top bracket.
| Province / territory | Top marginal — ordinary | Top — eligible div. | Top — non-eligible div. | Top — capital gain |
|---|---|---|---|---|
| British Columbia | 53.50% | 36.54% | 48.89% | 26.75% |
| Alberta | 48.00% | 34.31% | 42.31% | 24.00% |
| Saskatchewan | 47.50% | 29.64% | 41.82% | 23.75% |
| Manitoba | 50.40% | 37.78% | 46.67% | 25.20% |
| Ontario | 53.53% | 39.34% | 47.74% | 26.77% |
| Quebec | 53.31% | 40.11% | 48.70% | 26.65% |
| New Brunswick | 52.50% | 32.40% | 46.83% | 26.25% |
| Nova Scotia | 54.00% | 41.58% | 48.28% | 27.00% |
| PEI | 51.75% | 36.20% | 47.63% | 25.88% |
| Newfoundland & Labrador | 54.80% | 46.20% | 48.96% | 27.40% |
| Yukon | 48.00% | 28.93% | 44.04% | 24.00% |
| NWT | 47.05% | 28.33% | 36.82% | 23.53% |
| Nunavut | 44.50% | 33.08% | 37.79% | 22.25% |
Top-bracket combined rates, illustrative for 2026. Capital-gain rate shown reflects the 50% inclusion rate currently in force. Rates are subject to in-year provincial budget changes — verify before filing.
Eligible vs. non-eligible dividends
Eligible dividends are paid out of corporate income that has been taxed at the general corporate rate (typically large CCPCs paying out of GRIP or public companies). Non-eligible dividends are paid out of income taxed at the small business rate or out of investment income.
For an HNW owner-manager, the difference matters: at the top bracket the gap between eligible and non-eligible dividend rates is typically 8 – 13 percentage points, which is the entire economic case for tracking GRIP balances and timing distributions.
Why advisors care. Insurance death benefits paid through the Capital Dividend Account (CDA) are received personally tax-free — sidestepping the dividend table above entirely. That is the structural reason corporate-owned life insurance is the most tax-efficient wealth-transfer tool available to a Canadian incorporated business owner.
Corporate rates — general & small business (2026)
Active business income earned by a CCPC up to the $500,000 small business limit is taxed at the combined small business rate. Income above the limit, or earned by a non-CCPC, is taxed at the general rate. Investment income is taxed at a separate (high) rate but generates RDTOH that is refundable on dividend payment.
| Province | SBD combined | General combined | M&P (where applicable) |
|---|---|---|---|
| Federal only | 9.0% | 15.0% | 15.0% |
| British Columbia | 11.0% | 27.0% | 27.0% |
| Alberta | 11.0% | 23.0% | 23.0% |
| Saskatchewan | 10.0% | 27.0% | 25.0% |
| Manitoba | 9.0% | 27.0% | 27.0% |
| Ontario | 12.2% | 26.5% | 25.0% |
| Quebec | 12.2% | 26.5% | 26.5% |
| New Brunswick | 11.5% | 29.0% | 29.0% |
| Nova Scotia | 11.5% | 29.0% | 29.0% |
| PEI | 10.0% | 31.0% | 31.0% |
| Newfoundland & Labrador | 11.5% | 30.0% | 30.0% |
Combined federal + provincial. SBD column applies to active business income up to the $500,000 federal limit, subject to grind for taxable capital ≥ $10M and passive-income rules below.
Capital gains & the 50% inclusion rate
For 2026 the capital gains inclusion rate remains 50% for individuals, trusts and corporations. The 2024 federal proposal to raise the inclusion rate to 66.67% above $250,000 was cancelled in early 2025 and is not in force.
Practically, this means at the top Ontario bracket of 53.53%, a realized capital gain is effectively taxed at 26.77% personally — half the rate of ordinary income.
| Holder | Inclusion rate | Note |
|---|---|---|
| Individuals | 50% | All gains, no $250K threshold. |
| Trusts | 50% | Same as individuals; allocations to beneficiaries flow at 50%. |
| CCPCs | 50% | Non-taxable half flows into the Capital Dividend Account (CDA). |
The LCGE on QSBC shares
The Lifetime Capital Gains Exemption shelters capital gains realized on the disposition of qualified small business corporation (QSBC) shares, qualified farm property, and qualified fishing property. For 2026 the exemption is indexed to over $1.25 million per individual.
| Asset class | 2026 exemption | Held by |
|---|---|---|
| QSBC shares | $1.25M+ (indexed) | Individual |
| Qualified farm property | $1.25M+ (indexed) | Individual |
| Qualified fishing property | $1.25M+ (indexed) | Individual |
Multiplied by the number of family-member shareholders who individually qualify (commonly via an estate freeze + family trust). Strict purification, holding-period and asset-use tests apply.
Stacking the LCGE across multiple family members through a properly structured family trust is one of the most powerful exit-planning levers for incorporated business owners.
Passive income & the SBD claw-back
Adjusted Aggregate Investment Income (AAII) earned in a CCPC (and its associated group) above $50,000 reduces the $500,000 small business limit by $5 for every $1 of excess AAII. At $150,000 of AAII, the small business deduction is fully eliminated for the group.
| Passive income (AAII) | SBD limit available | Effective grind |
|---|---|---|
| Up to $50,000 | $500,000 | 0% |
| $75,000 | $375,000 | 25% |
| $100,000 | $250,000 | 50% |
| $125,000 | $125,000 | 75% |
| $150,000+ | $0 | 100% |
This is one of the structural reasons HNW operators move corporate retained earnings out of taxable investment portfolios and into tax-exempt structures — corporate-owned permanent life insurance, an Individual Pension Plan, or a Retirement Compensation Arrangement.
Why these numbers drive strategy
Tax tables look static. They are not — they are the input layer for every meaningful corporate planning decision:
Distributions & salary–dividend mix
The spread between SBD-rate retained earnings and the personal eligible/non-eligible dividend rate determines whether to pay salary, dividend, or retain. Provinces with a wide gap (Ontario, BC) reward retention; provinces with a narrower gap shift the answer.
Estate freezes & trusts
The 50% capital gains inclusion rate, the indexed LCGE, and the 21-year deemed disposition rule on family trusts together shape when (and how) to freeze. Family trusts become a multiplier on the LCGE; an estate freeze caps the founder's gain at today's value.
Corporate-owned life insurance
The CDA mechanic ties directly to capital gains: half of every realized gain in a CCPC is tax-free and flows into CDA. Insurance proceeds (less ACB) flow into the CDA in full. Corporate-owned life insurance (COLI) turns a 48–53% personal estate tax into a near-tax-free transfer.
Passive income mitigation
If AAII is approaching $50,000, every additional dollar of taxable interest costs the CCPC group up to $50 in lost SBD. Permanent life insurance, an IPP, or an IRP moves capital into structures that don't generate AAII.
FAQ
50%. The 2024 federal proposal to raise it to 66.67% above $250,000 was cancelled in early 2025. The long-standing 50% inclusion rate continues to apply to all individuals, trusts, and corporations.
The LCGE on qualified small business corporation shares is indexed to over $1.25 million per individual for 2026. Qualified farm and fishing property use the same indexed amount.
9% federally on the first $500,000 of active business income for a CCPC. Combined federal + provincial small business rates range from approximately 9% to 12.2% depending on province.
Approximately 26.75% in the lowest-rate provinces and roughly 39 – 46% in the highest, depending on residence. See the by-province table above.
The $500,000 SBD limit is reduced $5 for every $1 of Adjusted Aggregate Investment Income (AAII) over $50,000 in the associated CCPC group, and is eliminated entirely at $150,000 of AAII.
The death benefit (less ACB) flows into the corporation's Capital Dividend Account, which is paid out personally tax-free. That bypasses the eligible/non-eligible dividend rates above and is what makes COLI the most tax-efficient wealth-transfer tool for a Canadian incorporated business owner.
Continue with the related references.
Each of the guides below is part of the same Goald & Co library — written for incorporated owners and HNW Canadian families coordinating tax, insurance, and estate planning together.
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Book a strategy callDisclaimer. This guide is a plain-language reference of 2026 Canadian tax rates compiled by Goald & Co Financial Inc. for educational purposes. Rates are illustrative, drawn from publicly available federal and provincial budget data, and subject to in-year change. Bracket thresholds round; exact filing should be done against current CRA and provincial tax authority publications. Nothing in this guide constitutes tax, legal, or accounting advice. Coordinate with your CPA and tax counsel before acting on any of the figures or strategies referenced. Sources: Department of Finance Canada, CRA T1/T2 schedules, provincial budget documents.