Canadians will see several tax changes in 2026 that will influence how much income they take home, as the Canada Revenue Agency releases updated tax brackets indexed to a two per cent inflation rate. The CRA adjusts brackets each year using consumer price index data, which has steadily declined from 6.3 per cent in 2023 to 2.7 per cent in 2025. The updated thresholds, along with revised non-refundable credit amounts, come into effect on January 1, while adjustments to federal benefits such as the GST credit, the Canada Child Benefit and the Child Disability Benefit take effect July 1.
The new federal brackets mean income under $58,523 will be taxed at 14 per cent, while earnings up to $117,045 fall into the 20.5 per cent range. Income between $117,045 and $181,440 will be taxed at 26 per cent, and those earning up to $258,482 will face a 29 per cent rate. Any amount above that will be taxed at 33 per cent. Provincial and territorial brackets will also adjust for inflation.
The basic personal amount, which determines how much Canadians can earn before paying federal tax at the lowest rate, is rising to $16,452 in 2026. Anyone earning $181,400 or less will receive the full credit of $2,303. For higher earners, the amount phases down to $14,829, providing a reduced credit.
Employment insurance premiums will also shift. Employees will contribute 1.63 per cent, capped at $1,123.07, while employers will contribute 2.28 per cent, with a maximum of $1,572.30. The insurable earnings limit rises to $68,900.
CPP contribution rates remain at 5.95 per cent for both employees and employers, with a maximum contribution of $4,230.45 each. The maximum pensionable earnings will increase to $74,600, and workers earning between $74,600 and $85,000 will pay into the second CPP tier at four per cent, to a maximum of $416. Self-employed Canadians will continue paying both the employer and employee share at 11.9 per cent.
Families will see an increase in child benefits beginning next July. The Canada Child Benefit rises by two per cent, bringing the annual amount for children under six to $8,157 and for children aged six to seventeen to $6,883. The income level at which the benefit begins to phase out will move to $38,237.
The annual contribution limit for Tax-Free Savings Accounts will remain unchanged at $7,000 for 2026, while RRSP limits will increase slightly to $33,810. The Old Age Security repayment threshold is also being updated, with further details from the federal government expected.
These adjustments reflect a continued effort to align federal tax policies with moderating inflation and shifting economic pressures heading into 2026.