The 2026 tax year brings the most significant personal income tax cut in over a decade, a major reversal on capital gains policy, higher contribution room, and increased payroll costs through CPP2. Here is every change that affects your bottom line.
Six changes that impact how much tax you pay this year — whether you file a T1 personal return or manage a corporation.
Save up to $420 per person ($840 per couple) on the first $58,523 of taxable income. Bill C-4 received Royal Assent March 12, 2026.
The proposed 66.7% inclusion rate is officially dead. The rate stays at 50% for individuals, corporations, and trusts.
The Lifetime Capital Gains Exemption increased to $1.25 million on qualifying small business shares and farm/fishing property.
Up $1,320 from 2025. TFSA annual limit stays at $7,000 (cumulative room now $109,000 since 2009). FHSA unchanged at $8,000.
Replaces the GST/HST credit. Up to $1,890 per family of four, $950 for singles. A 50% top-up ships by June 2026.
Multi-factor authentication is now mandatory. CRA also stopped mailing paper tax packages — order online or file electronically.
Bill C-4, the Making Life More Affordable for Canadians Act, received Royal Assent on March 12, 2026 and reduced the lowest federal income tax bracket from 15% to 14%. This applies to the first $58,523 of taxable income and is now permanent law for 2026 and beyond.
The federal government's proposed increase to the capital gains inclusion rate from 50% to 66.7% on gains exceeding $250,000 has been officially cancelled. The inclusion rate stays at 50% for all taxpayers — individuals, corporations, and trusts alike.
If you delayed selling property or investments in anticipation of this change, the window is now clear. The 50% rate is confirmed.
The LCGE increased on the sale of qualifying small business shares and farming or fishing property. If you are planning a corporate wind-down or ownership transition, this higher exemption can shelter significant gains from tax.
| Account | 2025 | 2026 | Change |
|---|---|---|---|
| RRSP | $32,490 | $33,810 | +$1,320 |
| TFSA (annual) | $7,000 | $7,000 | No change |
| TFSA (cumulative since 2009) | $102,000 | $109,000 | +$7,000 |
| FHSA (annual) | $8,000 | $8,000 | No change |
Your personal RRSP limit is 18% of your previous year's earned income, up to the annual maximum. Check your Notice of Assessment or CRA My Account for your exact figure.
Replaces the previous GST/HST credit structure with higher payments to help offset rising costs. A one-time 50% top-up will be issued by June 2026, with permanent increases of 25% phased in over five years.
CRA now requires multi-factor authentication (MFA) to access My Account. If you have not set this up yet, you will be prompted on your next login. CRA has also launched a GenAI chatbot for common questions and redesigned its self-service web pages.
💡 Set up MFA now before you need to file or check your account — the process takes about 5 minutes.
CRA will no longer automatically mail paper income tax packages. If you file on paper, you must order a copy online or by phone. This affects the 2025 tax year filing due April 30, 2026. Electronic filing through NETFILE or a tax professional is not affected.
The federal small business tax rate remains at 9% on the first $500,000 of active business income for Canadian-Controlled Private Corporations (CCPCs). Combined with Alberta's 2% provincial rate, qualified Alberta corporations pay approximately 11% combined on eligible income.
| CPP Component | 2025 | 2026 | Change |
|---|---|---|---|
| CPP1 Max Pensionable Earnings (YMPE) | $71,300 | $74,600 | +$3,300 |
| CPP2 Second Ceiling (YAMPE) | $81,200 | $85,000 | +$3,800 |
| CPP1 Rate (employee/employer) | 5.95% | 5.95% | No change |
| CPP2 Rate (employee/employer) | 4.00% | 4.00% | No change |
| Max CPP2 Contribution (each) | $396 | $416 | +$20 |
| Total Max CPP per Employee (employer match) | $4,430 | $4,646 | +$216 |
If your payroll system hardcoded the 2025 YAMPE ceiling of $81,200 instead of pulling the updated $85,000, employees earning between $81,200 and $85,000 are being under-deducted. Verify your payroll settings immediately.
CRA has introduced new T4A reporting requirements specifically for the trucking industry. If your business uses independent contractor drivers, review the updated reporting obligations to avoid penalties. This reflects CRA's ongoing focus on gig economy and contractor classification.
The Return of Fuel Charge Proceeds to Farmers Tax Credit has officially ended. The 2024–2025 fuel charge year was the final eligible period, as the federal fuel charge ended April 1, 2025. Farm corporations that relied on this credit should factor its removal into their 2026 tax planning.
Self-employed individuals and incorporated business owners who work from home can continue to claim up to $500 using the simplified flat-rate method without detailed receipts. For those with higher home office costs, the detailed method (Form T2200) remains available and can yield larger deductions based on the proportion of your home used for work.
The capital cost allowance limit for passenger vehicles increased to $38,000 (plus applicable GST/PST) for vehicles acquired in 2026. If your business is purchasing a vehicle, this higher limit means a larger first-year deduction. The CCA rate for eligible zero-emission vehicles remains at 100% for the first year.
| Deadline | Who | What |
|---|---|---|
| April 30, 2026 | Individuals | T1 personal tax return + balance owing due |
| June 15, 2026 | Self-employed | T1 filing deadline (balance still due April 30) |
| 6 months after year-end | Corporations | T2 corporate tax return due |
| 2–3 months after year-end | Corporations | Corporate tax balance owing due |
| Last day of Feb 2027 | Employers | T4 and T4A slips for 2026 tax year |
Avoid late-filing penalties. Even if you owe, filing on time reduces penalties significantly.
Use the increased $33,810 limit. Your actual limit is on your Notice of Assessment or CRA My Account.
Ensure the $85,000 YAMPE ceiling is updated. Under-deductions create year-end tax surprises for employees and assessment issues for employers.
CRA now requires multi-factor authentication for all logins. Set it up before you need to access your account.
The inclusion rate increase is cancelled. If you postponed property sales or investment dispositions, the 50% rate is confirmed.
Adjusting your salary-dividend mix may take advantage of the new 14% bracket. The corporate tax team at Swift can model the optimal split for your situation.
Related Resources & Tools
Swift Accounting handles T1 personal returns, T2 corporate filings, payroll, and year-round tax planning for Calgary individuals and businesses. Book a free 30-minute consultation before the April 30 deadline.