2026 Tax Measures: What Changes to Expect in the New Year
The upcoming year will bring subtle shifts in tax measures and some support for personal support workers in Canada. Overall, the changes planned for 2026 are minor and may not significantly impact the majority of taxpayers.
2026 Tax Measures: Key Updates
Changes to the tax landscape in Canada for 2026 include adjustments to tax rates, credits, and contribution limits.
Reduction in Marginal Tax Rate
- The lowest marginal tax rate will decline by one percentage point from 15% to 14%.
- This reduction applies to income up to $58,523 starting January 1, 2026.
- During the 2025 election campaign, a tax rate of 14.5% was implemented on the first $57,375 earned.
Tax savings for couples with two incomes are projected to average around $750, falling short of earlier estimates of $840.
New Tax Credit for Personal Support Workers
- A temporary refundable tax credit of 5% on eligible earnings will be available for personal support workers.
- The maximum credit amounts to $1,100 for those earning at least $22,000 annually.
- This credit applies only to the 2026 to 2030 tax years.
Eligibility requires employment with an approved healthcare establishment, providing essential one-on-one care. Notably, this credit will not be available for workers in British Columbia, Newfoundland and Labrador, and the Northwest Territories due to provincial agreements for wage increases.
Lifetime Capital Gains Exemption Adjustment
The lifetime capital gains exemption for selling eligible small business shares, farms, or fishing properties will rise from $1 million to $1.25 million, retroactive to June 25, 2024. This adjustment aims to incentivize business development.
Enhanced Canada Pension Plan Contributions
- The maximum contribution ceiling will increase to $74,600 from $71,300, leading to contributions of $4,230.45 for employees in 2026.
- A second ceiling will also rise to $85,000, impacting additional contributions.
Both employees and employers will match contributions, leading to a maximum total of $8,460.90 per employee.
Income Taxes and Employment Insurance Premiums
In 2026, income tax brackets will increase by 2% due to inflation. Here are the new federal tax brackets:
| Income Range | Tax Rate |
|---|---|
| $0 – $58,523 | 14% |
| $58,524 – $117,045 | 20.5% |
| $117,046 – $181,440 | 26% |
| $181,441 – $258,482 | 29% |
| $258,483 and above | 33% |
The maximum annual Employment Insurance contribution will rise to $1,123.07, a slight increase from the previous year. Employers will also see a corresponding increase in their contributions.
Tax-Free Savings Account Limits
The Tax-Free Savings Account (TFSA) contribution limit will remain steady at $7,000 for 2026. Adjustments will also be made to basic personal exemption amounts to reflect inflation, customized by income and family circumstances.
As 2026 approaches, these tax measures underscore a minor evolution in the fiscal framework, focusing more on targeted support for specific sectors rather than sweeping reforms.
