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Tax Season 2026

12 Tax Changes for 2026 That Affect Your Return

The 14% federal rate for the full year, a new top-up credit, higher CPP and RRSP limits, a longer Home Buyers' Plan grace period, BC's 5.60% rate and more changes for the 2026 Canadian tax year.

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The 2026 tax year, which you’ll report on the return due April 30, 2027, brings the first full year of the federal rate cut, a credit that protects people with large claims, new help for personal support workers and tradespeople, and a handful of provincial changes, including a higher rate in BC. Here are the twelve changes to know before you file.

1. The 14% Federal Rate Applies All Year

The lowest federal income tax rate dropped from 15% to 14% on July 1, 2025, and the change became law when Bill C-4 received Royal Assent in March 2026. Because the cut came mid-year, 2025 returns used a blended rate of 14.5%. 2026 is the first year taxed at 14% for all twelve months.

Most non-refundable credits are also calculated at the lowest rate, which takes back part of the saving. The government puts the maximum saving at $420 per person. For an employee, whose CPP, EI and Canada employment credits also shrink, our calculator shows federal tax about $285 lower at $50,000 and about $360 lower for anyone earning more than $58,523, compared with the old 15% rate. That’s roughly double what the cut was worth in 2025.

Want to see the impact on your own situation? Run the numbers with our income tax calculator.

2. Brackets and Credits Rise 2% With Inflation

Federal tax brackets and most credit amounts were indexed by 2.0% for 2026, down from 2.7% for 2025. The 2026 federal brackets are 14% up to $58,523, 20.5% up to $117,045, 26% up to $181,440, 29% up to $258,482, and 33% above that.

The basic personal amount, the income you can earn before owing federal tax, rose to $16,452 from $16,129. It still shrinks for high earners, down to $14,829 at net incomes of $258,482 and up. The Canada employment amount rose to $1,501. See the full federal and provincial tables in our 2026 tax brackets guide.

3. A Top-Up Credit Protects Large Credit Claims

Because most non-refundable credits are calculated at the lowest rate, cutting that rate also lowers what the credits are worth. For most people the lower tax rate more than makes up for it. But someone claiming very large credit amounts, such as big medical expenses or tuition, could have ended up paying more.

Budget 2025 (tabled November 4, 2025) fixed this with a temporary top-up tax credit, enacted in Bill C-15 in March 2026. It applies from 2025 to 2030 and effectively keeps a 15% rate on the part of your non-refundable credit amounts above the first bracket threshold, which is $58,523 for 2026. Tax software works it out for you. On the 2025 return it was line 34990.

4. Higher CPP and CPP2 Ceilings

The Year’s Maximum Pensionable Earnings (YMPE) rose to $74,600 from $71,300. Employees still pay 5.95% on earnings between $3,500 and $74,600, so the maximum employee contribution rises to $4,230.45 (from $4,034.10).

The second ceiling for enhanced CPP (CPP2) rose to $85,000 from $81,200. Employees pay 4% on earnings between $74,600 and $85,000, up to $416 (from $396). Employers match both. Self-employed people pay both halves: up to $8,460.90 in regular CPP plus $832 in CPP2. If you’re self-employed, build these into your instalments. Our self-employed tax calculator can help you plan.

5. EI: A Slightly Lower Rate on a Higher Ceiling

The Employment Insurance premium rate fell to 1.63% from 1.64%, but maximum insurable earnings rose to $68,900 from $65,700. The maximum employee premium is $1,123.07, up from $1,077.48. In Quebec, where workers also pay into the QPIP, the rate is 1.30% (from 1.31%), for a maximum of $895.70. Employers pay 1.4 times the employee rate.

6. Quebec Cuts QPP and QPIP Rates

Quebec’s fall 2025 economic update cut two payroll contributions for 2026:

  • QPP: the base rate fell from 5.4% to 5.3%, so employees now pay 6.3% (down from 6.4%) on earnings between $3,500 and $74,600. The maximum is $4,479.30.
  • QPIP: the employee rate fell to 0.430% from 0.494%, on insurable earnings up to $103,000 (from $98,000). The maximum premium is $442.90. Self-employed workers pay 0.764%, down from 0.878%.

Together the two cuts are worth up to about $137 a year for an employee. More in our Quebec income tax guide.

7. RRSP Limit Rises to $33,810

The RRSP dollar limit increased to $33,810 for 2026, up $1,320 from $32,490. Your personal limit is 18% of your 2025 earned income, up to that cap, minus any pension adjustment, plus unused room carried forward. You’d need about $187,800 of 2025 earned income to reach the maximum.

Contributions made by March 1, 2027 can be deducted on your 2026 return. The 2027 limit is already set at $35,390. Check your exact savings with our RRSP calculator, or see the RRSP contribution limit guide.

8. A Longer Home Buyers’ Plan Grace Period

The Home Buyers’ Plan lets first-time buyers withdraw up to $60,000 from their RRSPs toward a home. Normally, repayments start in the second year after the withdrawal. Temporary relief already pushed that to the fifth year for first withdrawals made from 2022 to 2025.

Bill C-30, which received Royal Assent in June 2026, extends that relief to first withdrawals made from 2026 to 2028. If you make your first withdrawal in 2026, your 15-year repayment period starts in 2031 instead of 2028.

9. A Bigger Labour Mobility Deduction for Tradespeople

Construction tradespeople and apprentices who temporarily relocate for work can deduct travel and temporary lodging costs. Starting with 2026, the annual limit rises from $4,000 to $10,000, and the temporary lodging now only needs to be at least 120 km closer to the work site than your home (down from 150 km). The deduction is still capped at 50% of the income you earned at that work location, and the $10,000 limit will rise with inflation from 2027.

10. A New Tax Credit for Personal Support Workers

The new Personal Support Workers Tax Credit is refundable, so you get it even if you owe no tax. It’s worth 5% of eligible earnings, up to $1,100 a year, for 2026 through 2030.

To qualify, you must work for an eligible health care establishment, such as a hospital, nursing or residential care facility, or home care agency, and your main duties must include helping people with daily living and mobility. Earnings for work in British Columbia, Newfoundland and Labrador, and the Northwest Territories don’t count, because those governments already have agreements with Ottawa to raise personal support workers’ wages. Your employer must certify your eligible earnings, and the CRA has said this will be reported on your T4.

11. A Bigger GST Credit, Now Called the Canada Groceries and Essentials Benefit

The GST/HST credit has been renamed the Canada Groceries and Essentials Benefit. Legislation passed in February 2026 raised its value by 25% for five years, starting with the July 2026 payment, and paid a one-time top-up in spring 2026.

The payments from July 2027 to June 2028 will be based on your 2026 return. You don’t apply separately, but you do have to file, even if you had little or no income.

12. Provincial Changes

Most provinces and territories simply indexed their brackets for inflation, but a few made bigger changes for 2026:

  • British Columbia raised its lowest rate from 5.06% to 5.60% on the first $50,363 of taxable income. BC’s credits are also calculated at 5.60% now, but the net effect is about $176 more tax a year for most people earning over $50,000, and less at lower incomes. The BC tax reduction for low-income earners rose to $690. See our BC income tax guide.
  • Prince Edward Island added a 20% bracket on taxable income over $200,000, effective January 1, 2026 (about $490 more at $250,000), and raised its basic personal amount to $15,000 from $14,650.
  • Newfoundland and Labrador raised its basic personal amount to $15,000 from July 1, 2026, which works out to $13,094 for the 2026 year (worth about $166). It trimmed its low-income tax reduction to $842 to offset the higher amount.
  • Saskatchewan raised its basic personal amount to $20,381 from $19,491, the second of four planned $500 increases on top of inflation indexing.
  • Manitoba kept its brackets ($47,000 and $100,000) and its $15,780 basic personal amount frozen for a second year.

What Didn’t Change

  • Capital gains: the inclusion rate stays at 50%. The proposed increase to two-thirds was cancelled in March 2025. See our capital gains guide.
  • TFSA: the annual limit is still $7,000. Someone who was 18 or older in 2009 and has never contributed has $109,000 of total room.
  • FHSA: still $8,000 a year and $40,000 lifetime, with up to $8,000 of unused room carried forward.
  • Deadlines: file and pay by April 30, 2027. If you or your spouse are self-employed, you can file by June 15, 2027, but any balance owing is still due April 30.

Looking Ahead to 2027

A few 2027 changes are already law or announced: the CPP base rate drops from 4.95% to 4.75% for employees and employers (9.5% for the self-employed), the RRSP limit rises to $35,390, and BC has paused indexing its brackets from 2027 to 2030. The CRA typically announces the 2027 federal brackets and TFSA limit in November.

What This Means for Your 2026 Return

For most filers, the full-year 14% rate and the higher thresholds mean a slightly lower federal tax bill than in 2025, while higher CPP ceilings take a little more off paycheques above $71,300. BC residents will see a small increase from the higher lowest rate, and high earners in PEI pay more on income over $200,000.

If you buy a first home, work in construction away from home, or work as a personal support worker, check the changes above so you don’t miss money you’re owed. The best way to see how it all adds up is to run your numbers in our income tax calculator and plan ahead of the April 30, 2027 deadline.

This article is general information, not tax advice. Figures can change when governments update rates. Read the disclaimer.