2026 Tax Changes: Here Are Five Key Updates
The Canada Revenue Agency (CRA) has introduced important tax changes for 2026, which are crucial for Canadian taxpayers. These updates encompass changes to contribution limits and tax rates, aiming to enhance overall taxpayer service.
Key Changes for 2026 Tax Filings
New Contribution Limits
For the tax-free savings account (TFSA), the contribution limit remains $7,000 for 2026. The threshold has not changed due to inflation adjustments that haven’t reached the $7,500 mark.
Meanwhile, the dollar limit for contributions to registered retirement savings plans (RRSP) will increase to $33,810, up from $32,490. Canadians can contribute up to 18% of their previous year’s earnings, subject to this new limit.
Revised Tax Rates and Brackets
Beginning July 2025, the federal income tax rate for the lowest bracket has decreased to 14% from 15%. This adjustment will be applicable for the entire year in 2026. The new tax brackets for 2026 are as follows:
- Income up to $58,523: Taxed at 14%
- Income from $58,524 to $117,045: Taxed at 20.5%
- Income from $117,046 to $181,440: Taxed at 26%
- Income from $181,441 to $258,482: Taxed at 29%
- Income above $258,482: Taxed at 33%
Updated Basic Personal Amount
For 2026, Canadians will not pay federal income tax on the first $16,452 earned, an increase from $16,129 in 2025. This basic personal amount provides a tax benefit valued at up to $2,303 for most taxpayers at the lowest tax rate.
Changes in Filing Procedures
The CRA has announced it will no longer automatically send paper tax returns to taxpayers. Starting January 20, 2026, individuals who prefer paper filing must request their income tax packages either online or by phone. This reflects a sharp decline in paper returns, with only 7% of 2024 submissions via paper.
New Online Services to Enhance Accessibility
In alignment with the CRA’s 100-day plan, new online services have been introduced to make tax management easier. Taxpayers can now reset their CRA account credentials online, avoiding the need to call customer support. Additionally, the “Manage Balance” feature allows users with tax debts of $1,000 or more to set up repayment plans entirely online, streamlining the process for approximately half a million users.
These updates from the CRA are designed to support Canadians in navigating their tax obligations more effectively, making filing simpler and more efficient for all. Stay informed about these changes to optimize your tax planning in 2026.
