What's New for 2026
Every year the CRA adjusts the brackets, limits, and ceilings, and every so often the rules themselves change. Here's the 2026 tax year in one place: what applies to the income you're earning right now, filed in spring 2027. Last reviewed October 2026.
Rates & Brackets
What You Pay in 2026
The lowest federal rate is now 14%, for the full year
The federal rate on the first bracket dropped from 15% in mid-2025, which made 2025 a blended 14.5% year. 2026 is the first full year at 14%, and it applies to your first $58,523 of taxable income. Most people will see the difference as slightly lower payroll withholding rather than a bigger refund.
Federal brackets move up 2%
For 2026: 14% to $58,523 · 20.5% to $117,045 · 26% to $181,440 · 29% to $258,482 · 33% above that. If your raise this year was under 2%, you haven't moved up a bracket: the brackets moved with you.
More income before any federal tax
The basic personal amount rises to $16,452, and income below that attracts no federal tax at all. Higher earners see it phase down above $181,440, bottoming out at $14,829 past the top bracket.
Ontario brackets move too, mostly
Ontario's first two thresholds are indexed 1.9% for 2026: 5.05% to $53,891 and 9.15% to $107,785. The 11.16% ($150,000) and 12.16% ($220,000) thresholds are not indexed and stay put, as they do every year. Rates themselves are unchanged.
Contribution Room
Registered Account Limits
RRSP limit rises for 2026
Your new deduction limit is 18% of your 2025 earned income, to a maximum of $33,810, plus any unused room carried forward, less any pension adjustment. Your exact number is on your latest notice of assessment. Wondering what a contribution saves you? Run the numbers.
TFSA adds another $7,000
The annual TFSA limit holds at $7,000 for 2026. If you've never contributed and have been eligible since 2009, your cumulative room is now $109,000. Withdrawals from last year came back as room on January 1.
FHSA stays at $8,000 a year
The First Home Savings Account limits aren't indexed: $8,000 a year, $40,000 lifetime. One quirk worth repeating: unlike an RRSP, FHSA contributions only deduct in the calendar year you make them. A December contribution counts for 2026; a January one doesn't.
Payroll Ceilings
CPP & EI for 2026
CPP pensionable earnings ceiling rises
The year's maximum pensionable earnings (YMPE) moves to $74,600, with the basic exemption unchanged at $3,500. The second ceiling (CPP2) is set 14% higher at $85,000, and earnings between the two attract a further 4% employee contribution, to a maximum of $416.
EI insurable earnings ceiling rises
Maximum insurable earnings climb to $68,900 for 2026. The employee premium rate is $1.63 per $100 of insurable earnings, for a maximum premium of $1,123.07. If you cross the ceiling mid-year, deductions simply stop, with nothing for you to do.
Rule Changes
What Changed, and What Didn't
Capital gains inclusion rate stays at one-half
The proposed increase to a two-thirds inclusion rate was cancelled, and gains remain 50% taxable. One related change did survive: the lifetime capital gains exemption on qualified small business shares and farm or fishing property rose to $1.25 million in June 2024. It is indexed again from 2026, which makes it $1,275,000 this year.
A new credit for personal support workers
The fall 2025 federal budget introduced a temporary refundable credit for eligible personal support workers: 5% of eligible earnings, up to $1,100 a year. If you work in home or community care, it's worth confirming your eligibility when we prepare your return.
Since the Filing Season
What Changed Mid-Year
Every CRA drop box closed for good
All 45 locations across Canada shut permanently on May 29, 2026, after the filing season ended. Paper now goes by mail, which is slower, or through your CRA account, which isn't. If dropping documents off was your habit, this is the year it stops working.
Registering a business now needs a CRA account first
Business Registration Online moved behind a sign-in, and phone registration ended back in November 2025. So getting a business number, a GST/HST account, or a payroll account means having the account already, and identity verification by mailed security code can take ten business days. Plan that in rather than discovering it. How to set the account up.
The disability tax credit application route changed
Your CRA account's "submit documents" feature no longer accepts DTC applications unless the CRA has already asked you for more on an open file. Applications go through the digital DTC form or by mail. A second date follows: from September 8, 2026, versions of Form T2201 issued before 2023 are refused outright, so check which version you're holding before filling it in.
The fuel excise holiday now runs into 2027
The federal excise tax on gasoline, diesel, and aviation fuel has been suspended since April 20, 2026 — roughly 10¢ a litre on gasoline and 4¢ on diesel. It was due to end on September 7. On September 2 the government extended it through January 31, 2027, with half rates in February and March and full rates back on April 1, 2027. The bill confirming the extension had not passed as of October 2026. It's a price at the pump, not a line on your return, but if you claim vehicle costs against business or employment income, your fuel receipts from that window are genuinely lower and your logbook should show why.
The Underused Housing Tax is repealed
Legislation passed in March 2026 eliminated the UHT for 2025 and every year after: no return, no tax, permanently. The catch is that 2022 through 2024 still stand, penalties and interest included, so an unfiled year from that window doesn't go away on its own. Provincial and municipal vacancy taxes are separate and unaffected.
Interest on overdue tax is still 7%
The CRA sets these quarterly. For the fourth quarter of 2026 the rate on overdue tax, CPP, and EI stayed at 7%, and it compounds daily. The prescribed rate for family loans and low-interest employee loans held at 3% for a sixth straight quarter. Worth knowing: interest charged on a balance owing is not deductible.
Crypto platform reporting is proposed for 2027
Bill C-31 would write the OECD's Crypto-Asset Reporting Framework into the Income Tax Act. As drafted, it applies from the 2027 calendar year, and exchanges and other crypto service providers would file their first reports with the CRA before May 2, 2028. As of October 2026 the bill has not passed. None of it changes what you owe: crypto gains and income are taxable now, whether or not a platform reports them. If earlier years were never reported, fixing that voluntarily still beats waiting for a letter. Our crypto service page covers how we handle it.
An optional sign-in step when you file, from February 2027
From February 22, 2027, when 2026 returns start going in, NETFILE gains a new authentication step: you can sign in to your CRA account before the return is sent. For the 2026 return it is optional, and in the CRA's own words completing it "adds an extra layer of security". A first-time filer has no CRA account yet and files without it. Returns we prepare go in through EFILE, where the option sits with us rather than with you, so nothing changes on your side except one more reason to have your CRA account set up before the season opens.
Figures are the CRA's published 2026 amounts, verified against official sources in October 2026, but limits and rules can change in-year, and none of this is advice for your specific situation. Interest rates in particular are reset every quarter. Planning a contribution? Start with the RRSP calculator, or check the deadlines that go with these numbers.
Common Questions
Three Things People Ask
What is the lowest federal tax rate for 2026?
It is 14%, on the first $58,523 of taxable income. The rate dropped from 15% in mid-2025, which made 2025 a blended year, so 2026 is the first full year at the new rate. Most people see the difference as slightly lower payroll withholding rather than a bigger refund.
How much can I put in my RRSP and TFSA for 2026?
The RRSP dollar limit is $33,810, or 18% of your 2025 earned income if that is lower, plus unused room carried forward and less any pension adjustment. Your exact figure is on your latest notice of assessment. The TFSA limit stays at $7,000, and the FHSA stays at $8,000 a year with a $40,000 lifetime cap.
Did the capital gains inclusion rate change for 2026?
No. The proposed increase to a two-thirds inclusion rate was cancelled, and capital gains remain 50% taxable. The lifetime capital gains exemption on qualified small business shares and farm or fishing property is indexed again from 2026, which makes it $1,275,000 this year.
Sources: CRA, Indexation adjustment for personal income tax and benefit amounts · CRA, The CRA is enhancing security for online income tax and benefit return filing · CRA, T4127 Payroll Deductions Formulas, 122nd edition (January 2026) · CRA, CPP contribution rates, maximums and exemptions · CRA, EI premium rates and maximums · CRA, MP, DB, RRSP, DPSP, ALDA, TFSA limits, YMPE and the YAMPE · CRA, Prescribed interest rates
Keep Reading
Related guides and tools
Key CRA Dates
Every CRA deadline that matters, in one place: filing dates, the RRSP cutoff, quarterly instalments, slip deadlines, and corporate due dates.
Open the page →Personal Tax Estimator
Estimate your personal income tax refund or balance owing. Federal and provincial rates as of 2026, calculated instantly in your browser. London, Ontario.
Open the calculator →RRSP Savings Calculator
See how much tax your RRSP contribution saves. 2026 federal and provincial rates for every province and territory, calculated instantly in your browser.
Open the calculator →