This week the
(CRA) launched the brand new tax numbers for 2026. Right here’s what it is advisable know for subsequent 12 months.
Inflation adjustment issue
Every year, most earnings tax and profit quantities
. The CRA introduced that the inflation charge that shall be used to index the 2026 tax brackets and quantities shall be two per cent. (Final 12 months, that quantity was 2.7 per cent, as inflation was a bit increased). Will increase to the tax bracket thresholds and numerous quantities regarding non-refundable credit take impact on Jan. 1, 2026, whereas will increase in quantities for sure advantages, such because the GST/HST credit score and Canada Youngster Profit, solely take impact on July 1, 2026, coinciding with the start of this system 12 months for these profit funds.
Tax brackets for 2026
For 2026, all 5 federal earnings tax brackets have been listed to inflation
utilizing the 2 per cent charge
. The brand new 2026 federal brackets are: as much as $58,523 of earnings (15 per cent); above $58,523 to $117,045 (20.5 per cent); above $117,045 to $181,440 (26 per cent); above $181,440 to $258,482 (29 per cent), with something above that taxed at 33 per cent. Every province additionally has its personal set of provincial tax brackets, most of which will even be listed to inflation, however utilizing their respective provincial indexation elements.
Fundamental private quantity
The fundamental private quantity (BPA) is the quantity of earnings you possibly can earn
with out paying any federal tax
. Again in 2019, the federal government introduced a rise of the BPA yearly till it reached $15,000 in 2023, after which it was listed to inflation.
Consequently, for 2026, the elevated BPA shall be $16,452 that means a person can earn as much as this quantity in 2026, earlier than paying any federal earnings tax. For taxpayers incomes above this quantity, the worth of the federal credit score is calculated by making use of the bottom federal private earnings tax charge (dropping to 14 per cent in 2026) to the BPA, making it value $2,303. (As a result of the credit score is “non-refundable,” it’s solely well worth the most quantity if you happen to in any other case would have paid that a lot tax within the 12 months.)
However higher-income earners don’t get the complete, elevated BPA, as there’s an earnings check. The enhancement to the BPA is regularly lowered, on a straight-line foundation, for taxpayers with internet incomes above $181,440 (the underside of the fourth tax bracket for 2026) till it has been totally phased out as soon as a taxpayer’s earnings is over $258,482 (the edge for the highest tax bracket in 2026). Taxpayers in that high bracket, due to this fact, who lose the enhancement, will nonetheless get the “outdated” BPA, listed to inflation, which is $14,829 for 2026.
Canada Pension Plan contributions
For 2026, worker and employer
(CPP) contribution charges will stay at 5.95 per cent, however the “12 months’s most pensionable earnings” (YMPE), which can be referred to as the “first earnings ceiling,” will improve to $74,600, whereas the fundamental exemption quantity stays at $3,500. This improve was calculated in accordance with CPP laws, and takes into consideration the expansion in common weekly wages and salaries in Canada. This implies the 2026 most CPP contribution shall be $4,230.45 for every of the worker and employer parts. The self-employed CPP contribution charge stays at 11.9 per cent, and the utmost contribution will improve to $8,460.90.
You’ll recall, nevertheless, that as of 2024, a second CPP contribution charge and earnings ceiling was launched referred to as the “12 months’s extra most pensionable earnings” (YAMPE). It solely impacts employees whose earnings is above the primary earnings ceiling.
The extent of the second earnings ceiling relies on the worth of the primary earnings ceiling. For 2026, the second earnings ceiling shall be set at an quantity that’s 14 per cent increased than the primary earnings ceiling. Consequently, for 2026, pensionable earnings between $74,600 and $85,000 shall be topic to “second CPP contributions” (CPP2) at an worker and employer charge of 4 per cent, with a most contribution of $416 every. The 2026 self-employed CPP2 contribution charge shall be eight per cent, and the utmost self-employed contribution shall be $832.
Employment Insurance coverage premiums
(EI) premiums are additionally rising, with a contribution charge for workers of 1.64 per cent (1.30 per cent for Quebec) as much as a most contribution of $1,123.07 ($895.70 for Quebec) on 2026 most insurable earnings of $68,900.
Tax-free financial savings account restrict
The
tax-free financial savings account
(TFSA) restrict will stay at $7,000 for 2026. That’s as a result of the TFSA restrict solely will get elevated when the cumulative impact of the annual inflation changes after 2009 (the 12 months the TFSA started) is sufficient to push the restrict to the subsequent highest $500 increment. The listed TFSA greenback quantity for 2026 is now at $7,185, that means that the restrict stays at $7,000, the closest $500 increment.
Registered retirement financial savings plan restrict
The
Registered Retirement Financial savings Plan
(RRSP) greenback restrict for 2026 is $33,810, up from $32,490 in 2025. After all, the quantity you possibly can contribute to your RRSP in 2026 is proscribed to 18 per cent of your 2025 earned earnings, which incorporates (self-)employment and rental earnings, as much as the RRSP greenback restrict of $33,810, plus any unused RRSP contribution room from 2025, topic to any pension changes.
Previous Age Safety (OAS)
Should you obtain
, the OAS compensation threshold is ready at $95,323 for 2026, that means that your OAS shall be lowered in 2026 in case your internet earnings is above this quantity.
Prescribed charge
Lastly, the
for the primary quarter of 2026 will stay at three per cent. That is the “base charge,” and applies to taxable advantages for workers and shareholders, low-interest loans and different related-party transactions. The speed for tax refunds is 2 proportion factors increased than the bottom charge, that means that if the CRA owes you cash, the speed of curiosity shall be 5 per cent as of Jan. 1, 2026.
Should you owe the CRA cash, nevertheless, the speed the CRA fees is a full 4 proportion factors increased than the bottom charge. This places the rate of interest on tax money owed, penalties, inadequate instalments, unpaid earnings tax, CPP contributions and EI premiums at seven per cent come Jan. 1, 2026.
Jamie Golombek,
FCPA, FCA, CFP, CLU, TEP, is the managing director, Tax & Property Planning with CIBC Personal Wealth in Toronto.
Jamie.Golombek@cibc.com
.
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