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2026 tax year

What changed for 2026 taxes in Ontario: a plain summary

Tax news travels faster than tax law, so it is easy to plan around a change that never happened or miss one that did. This summary sorts the 2026 items into what changed, what was proposed and what was cancelled, using CRA’s own pages as of October 24, 2026. It is general information for Ontario individuals and owner-managed businesses. Use it to decide what to raise with your accountant, not to replace a calculation.

Sora Accounting & Tax · General information · Editorial policy
Updated · 5 min read

Sorting 2026 tax news into changed, proposed and cancelled

A branching diagram that sorts 2026 tax news into rules that changed, proposals still to confirm and a cancelled capital gains inclusion rate increase.

Visual labels: Changed: 14% lowest rate; Changed: Ontario 2.2% rate; Proposed: check status; Cancelled: 2/3 inclusion.

See the sourced 2026 Ontario tax guide: rates, limits and deadlines →

What to take away

  • The capital gains inclusion rate increase was cancelled, and the lowest federal rate is a full-year 14% for 2026.
  • Ontario’s lower corporate rate fell to 2.2% on July 1, 2026, and the underused housing tax stopped for 2025 and later years.
  • Treat proposed changes as proposals until enacted, and check your own limits and thresholds before acting.

Start with what did not change

The proposed increase in the capital gains inclusion rate, from one-half to two-thirds, was deferred and then cancelled. CRA’s corporation update page records the cancellation. In practice, the one-half inclusion rate continues to apply, so planning built around a rush to sell before a higher rate no longer has a reason behind it.

Cancelled proposals leave a trail of old advice. If a spreadsheet, an article or a conversation from 2024 mentions a two-thirds rate, ask which version of the rule it assumed. For the mechanics of reporting a sale, see our article on selling a rental property, and the encyclopedia entry on capital gains.

The federal lowest rate is now 14%

CRA’s what’s-new page describes a reduction of the lowest federal rate from 15% to 14%, starting July 1, 2025, under proposed changes. Because that date fell mid-year, CRA describes the full-year rate for 2025 as 14.5%. For 2026 the lowest federal rate is a full-year 14%, applied to the first $58,523 of taxable income.

CRA also describes a top-up tax credit meant to keep a 15% rate for certain non-refundable credits claimed on amounts over the first bracket threshold, which was $57,375 in 2025. Your software normally calculates it. The practical point is that a 2025 return and a 2026 return will not use the same rates, so last year’s refund or balance is a weak guide to this year’s.

Brackets and payroll figures for 2026

The 2026 federal brackets run at 14%, 20.5%, 26%, 29% and 33%, with thresholds at $58,523, $117,045, $181,440 and $258,482. Ontario’s 2026 brackets are 5.05%, 9.15%, 11.16%, 12.16% and 13.16%, with thresholds at $53,891, $107,785, $150,000 and $220,000. Each rate applies only to the slice of income inside its bracket.

On payroll, the 2026 CPP ceiling is $74,600 with a $3,500 basic exemption, and the 5.95% employee rate gives a maximum of $4,230.45. CPP2 applies between $74,600 and $85,000 at 4%, for a maximum of $416. EI is 1.63% on up to $68,900, a maximum of $1,123.07. Employers match CPP and CPP2 and pay 1.4 times the employee EI premium. Our guide on payroll deductions shows how these fit together.

Registered plan limits for 2026

The RRSP annual dollar ceiling for 2026 is $33,810 and the TFSA annual limit is $7,000. The FHSA allows $8,000 of participation room in the year you open your first account, with an ordinary lifetime limit of $40,000. These are published ceilings, not your personal room. Your notice of assessment and CRA records show what you can actually use.

Timing differs by plan. An RRSP contribution made in the first 60 days of 2027 can generally be deducted for 2026, while an FHSA contribution must be made by December 31, 2026 to be deducted for 2026. Our article on the 2026 limits goes through each account in more detail.

Alternative minimum tax: check if it applies to you

CRA describes proposed changes to the alternative minimum tax, or AMT, for 2024 and later years that changed how adjusted taxable income is calculated. AMT is a parallel calculation that limits the benefit of certain deductions and credits. It matters only when it produces more tax than your regular calculation.

For 2025, CRA’s guidance says that if your total of listed items plus the capital gains amount is $177,882 or less, you probably do not need Form T691. The listed items include rental losses created by capital cost allowance, carrying charges, the capital gains deduction and the dividend tax credit. If you had a large capital gain, a business sale or heavy deductions, ask your accountant to run the AMT calculation early. We have not repeated a 2026 threshold because we did not confirm one.

Housing and small business share changes

The underused housing tax is no longer payable for 2025 and later calendar years. CRA states that affected owners do not need to file a return or pay it for those years, following royal assent on March 26, 2026. The filing and payment requirement still applies to 2022, 2023 and 2024, so an unfiled earlier year is not erased by this change.

For people selling shares of a small business, CRA’s 2025 pages list proposed changes: a capital gains rollover for replacement shares with a higher asset limit of $100 million and a longer period to buy replacement shares, plus a capital gains deduction for qualifying cooperative conversions. The lifetime capital gains exemption is listed at $1,250,000 for 2025 under proposed changes, which means a maximum deduction of $625,000. Confirm the 2026 figure and eligibility before relying on either, as the conditions are technical.

Changes that affect owner-managed businesses

Ontario’s lower corporate income tax rate fell from 3.2% to 2.2% on July 1, 2026. A fiscal year that spans that date is calculated using the days each rate was in force. The federal small business rate remains 9%, and the business limit is $500,000. Our article on the rate cut explains how the blend works and what to review.

Three further items matter for sales and equipment. Nova Scotia’s HST rate has been 14% since April 1, 2025, so an Ontario business that delivers to Nova Scotia customers should check which rate applies. The federal fuel charge ended April 1, 2025. CRA also shows proposed measures to reinstate the accelerated investment incentive and immediate expensing for certain property acquired from 2025, so ask about timing before a large equipment purchase.

How to use this at year-end

Work through a short list. Confirm which rules affect you: a sale, a rental, a business, a move or a new benefit. Gather your latest notice of assessment, last year’s return and any slips. Ask your accountant to treat proposed changes as proposals until they are enacted, and to show the numbers with and without them where the outcome matters.

Then fit the changes into your calendar. The fourth personal instalment is due December 15, 2026, the FHSA year ends December 31, T4 and T4A slips are due March 1, 2027, and most 2026 personal returns are due April 30, 2027, with self-employed returns due June 15, 2027 but any balance still due April 30. Our year-end checklist and deadlines guide put these in order.

Sources & editorial notes

Sources checked October 24, 2026. The examples are illustrative and provide general information. Discuss how the guidance applies to your circumstances with your accountant.

Rules and guidance can change. Use the current official source and confirm the treatment for your facts. To flag an error, contact Sora.