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Canada Revenue Agency (CRA) national headquarters in Ottawa. THE CANADIAN PRESS/Sean Kilpatrick
By Joshua SantosOpens
Updated: December 01, 2025 at 2:38PM EST
Published: December 01, 2025 at 2:31PM EST
Several tax changes will be implemented next year and will affect how much you take home after deductions.
The Canada Revenue Agency (CRA) revealed new federal tax brackets adjusted for inflation. The inflation amount used to index tax brackets in 2026 will be two per cent.
The agency incorporates consumer price index (CPI) data to calculate income tax and benefit amounts each year. The 2025 amount was 2.7 per cent, in 2024 it was 4.7 per cent and in 2023 it was 6.3 per cent as inflation was higher.
Increases to tax bracket thresholds and amounts relating to non-refundable credits will take effect on Jan. 1. 2026.
Benefits like the goods and services tax credit, the Canada child benefit and Child disability benefit will take effect on July 1, 2026.
New tax brackets for 2026
The amount of taxes you will pay depends on how much you make each year.
- Income under $58,523 will be taxed at 14 per cent.
- Incomes from $58,523 to $117,045 will be taxed at 20.5 per cent.
- Incomes from $117,045 to $181,440 will be taxed at 26 per cent.
- Incomes from $181,440 to $258,482 will be taxed at 29 per cent
- Incomes of $258,482 and over will be taxed at 33 per cent.
The 13 provinces and territories have their own tax brackets indexed to inflation.
Basic personal amount raised
The government has raised the basic personal amount (BPA), which is the amount of income you can earn before paying federal taxes at the lowest federal tax rate of 14 per cent.
For 2026, the amount is $16,452. If you make $181,400 or less, you are eligible for the full tax credit worth $2,303 as it is determined by applying the lowest federal tax rate (14 per cent) rather than the tax bracket.
For earners earning $181,440 or more, the BPA amount decreases to $14,829 at 14 per cent for a tax credit worth $2,076.06.
Changes to employment insurance premiums
Employment contribution premiums will change.The contribution rate for employers is 2.28 for an annual maximum of $1,572.30. The contribution rate for employees is 1.63 per cent for a maximum of $1,123.07. The maximum annual insurable earnings will be $68,900.
Limits for contributions to Canada Pension Plan
Employer and employee contribution limitsfor the Canada Pension Plan (CPP) will be 5.95 per cent remaining the same as 2025 rates. The maximum CPP contributions for employers and employees will be $4,230.45.
Next year’s maximum pensionable earnings (YMPE) [maximum amount of your income used to calculate CPP] will be $74,600, an increase from $71,300.
If you earn more than the ceiling amount, that extra income does not have basic CPP deducted from it. The basic exemption will remain the same at $3,500 set in 2025. Earners between $74,600 and $85,000 will fall into second CPP contributions category of four per cent with a maximum contribution of $416 each.
Self-employed workers pay both the employer and employee portions for CPP at 11.9 per cent and a maximum employee and employer total contribution of $4,230.45. A basic exemption will be $7,000.
Increase to child benefit payments
The Canada Child Benefit will increase by two per cent. The base amount for children under six is $8,157 annually, up from $7,997 in 2025 and $7,797 in 2024.
The base amount of children is $6,883, up from $6,748 in 2025 and $6,570 in 2024.
The adjusted family net income at which phase out begins is $38,237 for 2026, up from 37,487 in 2025 and 6,570 in 2024.
No change to tax-free savings accounts
The limit for tax-free savings accounts will remain the same at $7,000 for 2026.
It has been steady since increasing in 2023 from $6,500. The annual limit is calculated based on CPI and rounded to the nearest $500. Unused contribution room from previous years is carried forward indefinitely.
RRSP limits for 2026
The contribution limit for Registered Retirement Savings Plans (RRSPs) for 2026 will be $33,810 from $33,490. The year’s YMPE IS $74,600.
Old age security threshold
The limit for age old security repayment threshold is set for $95,353 for 2026. If your net income is more than the amount, your OAS will be reduced.
Original:
https://www.ctvnews.ca/business/article/heres-how-much-you-will-be-taxed-in-2026-canada-revenue-agency
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