What's New for the 2026 Tax-Filing Season
Stay ahead with the latest Canadian tax regulations, updated brackets, and important deadlines. Our expert team will guide you through every change and help you maximize your refund while ensuring full compliance with CRA requirements.
Federal Income Tax Brackets — 2026
Canada uses a progressive tax system where higher income is taxed at higher rates. For 2026, the lowest rate is effectively 14.5% due to mid-year changes. Understanding these brackets helps you plan better and potentially lower your tax burden.
How Progressive Tax Works
You don't pay the highest rate on all your income — only on the portion that falls within each bracket. For example, everyone pays the same tax on their first $57,375, regardless of total income.
Ontario Tax Brackets — 2026
In addition to federal taxes, Ontario residents pay provincial income tax. Provincial rates vary by province — below are Ontario's marginal tax rates to help you understand your total tax obligation for the year.
Your Combined Marginal Rate
Your total marginal tax rate is the sum of federal + provincial rates. For example, someone in Ontario earning $200,000 would pay a combined marginal rate of 29% + 12.16% = 41.16% on their highest dollars earned.
Federal Tax Rate & Credit Updates
Here are the key changes for 2026 that may significantly affect your tax payable, refunds, payroll withholdings, and installment payments. Stay informed to make smarter financial decisions.
Lower Tax Rate
The lowest federal tax rate has been reduced mid-year (effective July 1, 2026), giving you a lower average tax rate and more money in your pocket.
Higher BPA
The Basic Personal Amount (BPA) has increased significantly, meaning more of your hard-earned income is completely tax-free this year.
Inflation Indexed
Federal tax brackets and many credits are now indexed for inflation, providing additional relief and protecting your purchasing power.
Important for Business Owners
CRA Correspondence Updates
CRA is moving businesses to online mail by default — check your settings
Business owners should regularly check My Business Account for updates
Enable email notifications to avoid missing important deadlines
Free Tax Filing Help for Eligible Canadians
The CRA is expanding its Simple File program to make tax filing easier for eligible Canadians. Low-income individuals and some seniors receive an invitation to file their tax return by phone or online completely free — with your information automatically pre-filled using CRA data.
Benefits You Could Receive:
2026 Limits: RRSP, TFSA & CPP
Maximize your retirement savings by understanding the contribution limits for 2026. These accounts offer powerful tax advantages that can help you build long-term wealth.
RRSP
Registered Retirement Savings Plan
- Tax Deduction: Contributions reduce your taxable income immediately
- Carry Forward: Unused contribution room carries forward indefinitely
- Deadline: 60 days into the next year (March 1, 2027 for 2026)
- Tax Deferred: Growth is tax-free until withdrawal in retirement
TFSA
Tax-Free Savings Account
- Tax-Free Growth: All investment earnings inside are completely tax-free
- Flexible Withdrawals: Take out money anytime without tax consequences
- Room Recovery: Withdrawals add back to your room the following year
- Penalty: Over-contributions are penalized at 1% per month
CPP Contributions
Canada Pension Plan
For 2026, both regular CPP and the enhanced CPP (CPP2) apply. Here's what you need to know:
CPP Basic (CPP1)
- Contribution Rate: 5.95% of pensionable earnings (employee & employer each)
- YMPE: $73,200 maximum earnings subject to regular CPP
- Basic Exemption: First $3,500 of earnings are excluded
CPP Enhanced (CPP2)
- Applies to: Earnings above $73,200 up to $83,400
- Contribution Rate: 4.00% (employer & employee each)
What this means for you:
- CPP2 only applies if your earnings exceed the basic CPP ceiling of $73,200
- Self-employed individuals pay both employer and employee portions
- Higher contributions mean higher retirement benefits
Ready to Maximize Your Tax Refund?
From corporate T2 returns to personal and small business taxes, our expert team provides professional, accurate tax filing services across Canada. Enjoy secure document upload, virtual consultations, and personalized guidance.