Do you need to pay tax instalments for 2026?

The test for 2026

The CRA says you may have to pay instalments for 2026 if your net tax owing is more than $3,000 for 2026 and also more than $3,000 in either 2025 or 2024. Quebec residents use $1,800 instead. The province or territory where you live on December 31 decides which threshold applies.

Net tax owing is the tax you end up owing once amounts already deducted at source and your credits are taken into account. It is not your total tax bill. Someone with a large employment income and generous withholding may owe little at filing time and never reach the threshold, while someone with a smaller bill and no withholding can cross it easily.

Both conditions have to be met. A single unusual year, such as a large capital gain, does not by itself create an instalment obligation, though it can lead to a reminder in later years. Your notices of assessment for 2024 and 2025 show the balances that count, so keep them within reach.

Who is usually caught

The CRA describes the typical situations as income without enough tax withheld: self-employment, rental or investment income, certain pension payments, and income from more than one job. Each of these has something in common. No employer is quietly sending part of every payment to the CRA, so the whole tax bill arrives at filing time.

Self-employed people also owe Canada Pension Plan contributions on their net earnings, and those are part of the instalment calculation. Landlords and investors often miss it because the cash arrives as rent or distributions that feel like pure income. Retirees can be caught when pension, interest and dividend income exceed what their pension plan withholds, and when two jobs each withhold as if they were the only one.

Farmers and fishers whose main income is from that work follow different timing, described below.

The three ways to calculate

No-calculation option. The CRA sets your amounts from your latest assessed return and shows them on your reminder. It suits you when income, deductions and credits stay roughly the same from year to year. You pay what the reminder says and do no arithmetic.

Prior-year option. You work out your payments from your 2025 return, using the CRA’s instalment calculation chart for 2026. It suits a year in which 2026 looks like 2025 but 2024 was quite different.

Current-year option. You estimate 2026 net tax owing, CPP contributions payable and any voluntary EI premiums. It suits a year when income has risen or fallen sharply, such as a new business or a lost contract. If you pay in full and on time under the prior-year or current-year option, the CRA does not charge instalment interest or a penalty unless your estimate turns out too low.

The right choice is the one that fits your income pattern, so it is worth deciding deliberately rather than paying whatever arrives.

2026 due dates

Most individuals who must pay instalments for 2026 pay on March 15, June 15, September 15 and December 15. When a date falls on a weekend or a public holiday the CRA recognizes, a payment received on the next business day is treated as on time. For 2026 that leaves one date still ahead as you read this: December 15, 2026.

The CRA sends a reminder (form INNS1) in February covering March and June, and another in August covering September and December. If you received only the August reminder, the CRA lays out how to split the year’s payments on the remaining two dates. The prior-year and current-year options then use 75% on September 15 and 25% on December 15.

Farmers and fishers whose main income is from farming or fishing have one due date each year, December 31, and a reminder in November. Check the CRA’s page or ask your accountant if that is you.

Interest and penalties

Instalment interest applies when you were required to pay, received a reminder showing an amount to pay, and then missed a payment, paid late or paid too little. It is charged on each late or short payment from its due date to your balance due date, compounded daily at the prescribed rate, which can change every three months. The CRA uses the calculation option that produces the least interest, and it charges nothing if the result is $25 or less.

A penalty applies only when instalment interest for the year is more than $1,000. In that case the CRA takes the higher of $1,000 or 25% of the interest you would have paid had you made no instalments, subtracts it from your actual interest and halves the difference. In the CRA’s own illustration, $2,500 of actual interest leads to a $750 penalty.

Overpaying or paying early earns instalment credit interest, which can offset interest charged on late or short payments for the same year. It is not refundable, so it is a way to reduce charges, not a source of income.

A simple illustration

Suppose, using round numbers, that a Hamilton landlord with a part-time job owed $4,000 after withholding in 2025 and $3,500 in 2024, and expects about $4,000 for 2026. She meets both parts of the test. She can follow the reminder, or she can calculate her own payments from the 2025 return. This is illustrative only and not a prediction for any real situation.

If a new tenant moves in and her rental income rises, her 2026 estimate may no longer match last year’s return. Revisiting the current-year option in August, rather than paying the old amount, can avoid a larger shortfall in April.

Ways to avoid or reduce instalments

Where income allows withholding, you can raise it instead. Request voluntary withholding on Old Age Security with form ISP3520OAS and on Canada Pension Plan benefits with form ISP3520CPP, both sent to Service Canada. For employment insurance or employer pension income, a revised TD1 goes to the payer. Withholding is not possible on self-employment, rental, investment or capital gains income.

The CRA shows an example in which extra monthly withholding brings expected net tax owing under $3,000, so the instalment reminders can be disregarded. Check the arithmetic before you disregard a reminder. If you received a reminder but your 2026 net tax owing is $3,000 or less, or $1,800 for Quebec, you do not have to pay instalments.

Record keeping and getting help

Instalments are claimed on line 47600 of the tax return (the line number on the 2025 return, so confirm it on the current form), using amounts on your reminder, your February summary (INNS2) and any payments not shown there. The CRA does not send a receipt right away, so keep proof of payment until you confirm it in CRA My Account or see it on your summary. Online payments can take about three business days to show, and cheques or money orders about ten.

An accountant can help when income is lumpy, when you are choosing between options or when a reminder looks wrong. Bring your 2024 and 2025 notices of assessment, this year’s income to date, withholding slips and a record of instalments paid. If the cash is the issue, a forecast built around the payment dates can show whether the money will be there on December 15.