Taxes in Canada in 2026: tax rates by province and on salary

Canada tax rates in 2026 at a glance

Canadians pay income tax twice: a federal tax at 14% to 33%, and a provincial tax that largely decides what you take home. On high incomes the combined rate reaches 53.5% in Ontario and British Columbia, 48% in Alberta and 44.5% in Nunavut.

In 2026 the lowest federal rate fell to 14%. It was 15% as recently as 2024, with a transitional 14.5% in 2025. Every bracket threshold has been indexed by 2%. Tax is calculated in Canadian dollars (CAD): at the Bank of Canada rate in 2026, one US dollar buys between 1.35 and 1.42 CAD and one euro about 1.61 CAD.

There is one tax authority for the whole country, the Canada Revenue Agency (CRA). It collects both federal and provincial tax on a single return. The exception is Quebec, where residents file a separate provincial return with Revenu Québec.

Canada has no wealth tax, no annual vehicle tax of the kind many European and post-Soviet countries levy, and no longer a tax on vacant homes. That last one, the Underused Housing Tax (UHT), was abolished starting with 2025.

What changed in 2025-2026

• The lowest federal rate is 14% from 2026, and the law has passed.
• British Columbia raised its lowest provincial rate from 5.06% to 5.6%. Alberta introduced a new 8% bottom rate in 2025, which in 2026 applies to the first 61,200 CAD of income.
• The Underused Housing Tax was repealed from 2025 by Bill C-15, passed in March 2026. Returns and tax for 2022-2024 are still due.
• The luxury tax no longer applies to aircraft and boats after November 4, 2025. It still applies to cars over 100,000 CAD.
• On March 21, 2025 the government scrapped its plan to tax two-thirds of capital gains instead of half. The lifetime exemption on selling small business shares stands at 1.25 million CAD.
• The federal excise tax on gasoline and diesel was suspended from April 20, 2026. The finance minister has announced that the pause will run until January 31, 2027.
• Ontario is cutting its small business tax rate from 3.2% to 2.2% from July 1, 2026.
• From July 2026 the GST/HST credit for lower-income households became the Canada Groceries and Essentials Benefit, with payments raised by 25%.
• Canada suspended its tax treaty with Russia in full from November 18, 2024.

Compare taxes in 146 countries: relocation taxes 2026

Who is a tax resident of Canada

Canada taxes people on their ties to the country, not on their passport. A Canadian citizen living and working in Portugal may owe Canada nothing, while a foreigner with a work permit and a flat in Toronto pays on worldwide income - salary, deposits, rent from an apartment back home.

The law has no single test. The CRA looks at residential ties, and three matter most: a home in Canada (owned or on a long lease), a spouse or common-law partner in Canada, and children or other dependants in Canada. If you have a home available to live in all year round, the CRA will almost certainly treat you as resident from day one.

Secondary ties count too: a car, Canadian bank accounts and credit cards, provincial health coverage, a driver's licence, club and professional memberships. On their own they decide little; together they paint a picture of a settled life.

The 183-day rule

If you have no residential ties but spend 183 days or more in Canada in a calendar year, the law treats you as resident for the whole year (a deemed resident). A deemed resident pays federal tax on worldwide income. Instead of provincial tax, they pay a federal surtax of 48% of basic federal tax. How different countries count these days is covered in our article on tax residency and the 183-day rule.

The year you arrive: what is taxed and what is not

In your first year you are resident only from the date your residential ties begin. Income earned abroad before that date is outside the Canadian tax net. Everything after it is inside.

One detail works in your favour: everything you own on the day you arrive (shares, crypto, a stake in a company, a flat abroad) is treated as bought again at that day's market value. Growth in value before you moved is not taxed in Canada. That makes it worth documenting what your assets were worth on arrival: broker statements, a valuation report, market quotes.

Immigration status and tax residency are different things. A permanent resident who lives abroad and has kept no ties to Canada can be a tax non-resident. A student or temporary worker with a family in Vancouver can be a resident. Citizenship changes nothing either; more on that on our page on Canadian citizenship by naturalization.

Canada tax residency rules: the 183-day test and residential ties

Canada does not decide residency by the calendar alone. Residential ties come first: a home, spouse or dependants in the country make you resident even without 183 days. The 183-day rule in paragraph 250(1)(a) of the Income Tax Act is a safety net: anyone who spends 183 days in Canada in a calendar year without such ties is deemed resident for the whole year.

The Canada Revenue Agency counts any part of a day. It counts days more generously than an airline counts miles: landing evening and departure morning both count. A resident pays 14-33% federal tax plus provincial tax on worldwide income. The calculator below shows your status today and on 31 December.

The law does not stop you from confirming the status on your own. But mistakes cost more: a home kept when you leave keeps you resident, and when you exit, Canada taxes the gain on your shares as if you had sold them. Murblz support removes these risks: we count days, assess your ties, plan the exit from residency, obtain the residency certificate and apply double tax treaties where they are in force. We guarantee professional work and a transparent process, and in most cases a result on the first filing.

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Canada income tax brackets 2026: federal rates and provinces

The federal brackets are the same everywhere in Canada; the provincial layer is where the gaps open up. On an income of 400,000 CAD, an Alberta resident hands over 48 cents of each additional dollar, a Nova Scotia resident 54. Choosing a province is also a tax decision.

The rates are progressive: each one applies only to the slice of income within its bracket. The first 16,452 CAD of income is effectively free of federal tax thanks to the basic personal amount, which becomes a tax credit of 14% of that sum, about 2,303 CAD. Above 181,440 CAD the amount is gradually cut back to 14,829 CAD. Employees also get the Canada employment amount of 1,501 CAD.

Quebec residents get their federal tax reduced by 16.5%, because the province funds some programs that Ottawa pays for elsewhere.

The top combined rates in the table come from consolidated 2026 calculations and are rounded. Ontario adds two more items on top of provincial tax. A surtax of 20% of provincial tax above 5,818 CAD and a further 36% above 7,446 CAD. And the Ontario Health Premium, up to 900 CAD a year depending on income.

Tax is calculated for the province you lived in on December 31. Moving from Vancouver to Calgary in December puts the whole year's income on Alberta rates.

Top combined rates in Canada are higher than in most US states; the comparison is on our page on taxes in the USA.

Tax on salary in Canada: CPP, EI and a worked example

On an 80,000 CAD salary in Toronto, you take home about 60,300 CAD a year, roughly three-quarters. The rest goes on federal and provincial income tax plus two mandatory contributions that the employer deducts at source.

In Quebec, workers pay into the provincial Québec Pension Plan (QPP) instead of CPP, their EI rate is lower at 1.30%, and there is a separate contribution for parental benefits. Nothing is charged above the ceilings: on a 200,000 CAD salary the pension contribution is the same as on 85,000.

The self-employed pay both halves of CPP: 11.9% of income between 3,500 and 74,600 CAD, up to 8,460.90 CAD a year, plus 8% for CPP2. EI is optional for them.

Worked example: an 80,000 CAD salary in Ontario

An illustrative calculation for a single employee with no children, no pension-plan contributions and no other deductions, using 2026 rates and thresholds.

The employee gives up 24.6% of salary, of which 17.7% is income tax and about 7% contributions. But every additional dollar at this level is taxed at 29.65%: 20.5% federal and 9.15% provincial. A 10,000 CAD bonus leaves about 6,900 in your pocket.

You can legally cut the bill with contributions to an RRSP (Registered Retirement Savings Plan, a tax-deferred pension account): the 2026 limit is 18% of last year's earned income, up to 33,810 CAD. The contribution is deducted from income, and tax is paid when the money comes out. The second tool is the TFSA (Tax-Free Savings Account): 7,000 CAD for 2026, and income inside it is never taxed. For a first home there is the FHSA (First Home Savings Account): 8,000 CAD a year, 40,000 CAD over a lifetime; contributions reduce tax and a withdrawal to buy a home is tax-free.

Ontario employers with a payroll above 1 million CAD also pay the provincial Employer Health Tax, and in many industries employers pay premiums to the provincial workplace injury insurance fund.

Corporate tax and dividend tax in Canada

A private Canadian company pays 9-12.2% on its first 500,000 CAD of profit rather than 23-30%. But only a company under Canadian control gets the break: if a non-resident owns and runs it, it pays the general rate from the first dollar.

The federal rate starts at a basic 38%, less a 10% abatement for provincial tax and a 13% general rate reduction. That leaves 15%. Small businesses pay 9% federally. Each province adds its own tax on top.

Who gets the small business rate

Only a CCPC (Canadian-controlled private corporation), meaning a company not controlled by non-residents or public corporations. A common mistake among people planning a move: incorporating in Ontario while still living abroad and counting on 12.2%. As long as the owner is a non-resident, the rate is 26.5%. After the move, once the owner is a tax resident, the company can become a CCPC.

Companies with large passive income lose the break: if interest, rent and portfolio income exceed 50,000 CAD a year, the 500,000 CAD limit shrinks and disappears at 150,000 CAD. Passive income of a CCPC is itself taxed at about 50%, part of which is refunded when dividends are paid out.

How dividends are taxed

The Canadian system is designed so that company profit plus the dividend to the owner add up to roughly the same tax as salary. To achieve this, the dividend is grossed up and the shareholder gets a credit for tax already paid by the company.

The higher Ontario rate on small business dividends from 2027 comes from the province's 2026 budget, which cuts the credit from 2.9863% to 1.9863%. Owners who have been accumulating profit inside their companies should rework their payout schedule before the end of 2026.

Non-residents receive dividends from a Canadian company net of a 25% withholding tax, which treaties usually cut to 5-15%. Setting up a company in Canada and opening an account for it are covered in our sections on company formation in Canada and business accounts in Canada.

GST, HST and PST: sales tax in Canada by province

The same 100 CAD purchase costs 105 CAD at the till in Calgary, 113 in Toronto and 114 in Halifax. Canada's VAT is federal, but provinces build their own tax on top, and the final rate varies threefold.

The federal tax is the GST (Goods and Services Tax) at 5%. Five provinces have merged it with their own tax into a single HST (Harmonized Sales Tax). Four more charge a separate PST (Provincial Sales Tax) on top of GST. Price tags usually exclude the tax: it is added at the till.

When a business must register

The registration threshold is 30,000 CAD of taxable sales over four consecutive calendar quarters. Below that, a business is a small supplier and need not charge GST/HST. Registering voluntarily earlier can pay off: it lets you recover the tax paid on equipment and services.

Exports of goods and services to clients outside Canada are generally zero-rated. A Montreal freelancer working for a client in Germany invoices without tax but still has to register once sales exceed 30,000 CAD. Foreign digital services selling subscriptions to Canadians must register under the simplified GST/HST system and charge the tax themselves.

Basic groceries, residential rent and most medical and financial services are free of sales tax. Buyers of new homes got a break in 2025: citizens and permanent residents buying a home for the first time get the GST back on a new home worth up to 1 million CAD, up to 50,000 CAD. Between 1 and 1.5 million CAD the rebate phases out, and above that it is not available. The purchase agreement must be signed on or after May 27, 2025 and before 2031.

Lower-income households are partly compensated for the tax. From July 2026 the payment is called the Canada Groceries and Essentials Benefit: up to 679 CAD a year for a single adult, up to 890 CAD for a couple and 234 CAD for each child under 19. Newcomers can apply before filing their first return.

Sole proprietors, freelancers, IT and digital nomads: does Canada have special regimes

Canada has no special regime for expats, freelancers or digital nomads: no flat tax, no simplified turnover tax, no new-resident rate of the kind Portugal or Italy offer. A sole trader pays on the same scale as an employee, plus both halves of the pension contribution.

Sole proprietors and freelancers

A sole proprietorship has no separate tax of its own: profit goes onto the personal return on form T2125, and business expenses are deducted from revenue - office rent or part of your home, equipment, phone and internet, travel, accounting. The return can be filed by June 15, but the tax must be paid by April 30.

The load is heavier than for an employee on the same amount: 11.9% into CPP instead of 5.95%, plus 8% for CPP2. On the other hand, business expenses stay out of the tax base. Above 30,000 CAD in sales, a freelancer registers for GST/HST.

When to incorporate

A company makes sense when profit exceeds what you need to live on. Money left inside a CCPC is taxed at 11-12.2% rather than at personal rates of up to 53.5%. The tax does not vanish: when dividends are paid, the owner tops up the difference. The gain is deferral and the ability to spread payouts over several years. For money you spend straight away, a company saves almost nothing.

IT and research

The main incentive for technology companies is the SR&ED credit (Scientific Research and Experimental Development). A CCPC gets 35% of qualifying development spending back in cash. For tax years beginning on or after December 16, 2024, the annual expenditure limit was doubled from 3 to 6 million CAD, meaning up to 2.1 million CAD in refunds. Other companies get a 15% credit that can only reduce tax payable. Provinces add their own credits.

There are several immigration routes for IT specialists; the fastest is a work permit under the Global Talent Stream. The start-up visa is closed to new applications; alternatives are on our page on the Canada start-up visa, and other routes for entrepreneurs are covered under Canada PR for entrepreneurs.

Digital nomads

Canada lets visitors work remotely for a foreign employer for up to six months without a work permit; details are on our page on the Canada digital nomad visa. There is no dedicated tax regime for nomads. With no home or family in Canada and fewer than 183 days a year in the country, a nomad usually remains a non-resident.

But work physically performed in Canada technically produces Canadian-source income. A tax treaty with your country of residence usually exempts it if the stay is shorter than 183 days and the employer is not Canadian. Tax residents of Russia no longer have that protection: the treaty is suspended.

Property tax, capital gains, inheritance and crypto tax in Canada

Selling your principal residence in Canada is completely tax-free, however much it has gone up. Everything else - shares, a second flat, a business stake, crypto - is taxed on half the gain at ordinary rates.

Capital gains

50% of the gain goes into taxable income. So the top rate on capital gains is half the top rate on salary: 26.8% in Ontario and British Columbia, 24% in Alberta. Worked example: on a 100,000 CAD gain from selling shares, a high-earning Ontario resident pays about 26,800 CAD. The government scrapped the planned increase to two-thirds in March 2025.

Capital losses can only be set against capital gains: in the three previous years or any future year. On selling shares of a Canadian small business corporation, or farm or fishing property, there is a lifetime exemption of 1.25 million CAD of gains.

The principal residence exemption covers one home per family for each year of ownership. The sale must still be reported on your return. Since 2023, a home sold less than 365 days after purchase is treated as a flip: the whole gain is taxed as business income, unless the sale follows events such as divorce, death, the birth of a child or a new job.

Buying property: land transfer tax

A one-off tax on purchase is levied by the provinces. In Ontario it is called land transfer tax and runs on a scale from 0.5% to 2.5%. Worked example: on a 900,000 CAD condo in Toronto, 14,475 CAD goes to the province and the same again to the city, because Toronto charges its own tax on almost the same scale. First-time buyers get up to 4,000 CAD back from Ontario.

Until January 1, 2027, foreigners without permanent residence are banned outright from buying homes in cities and metropolitan areas under the federal Prohibition on the Purchase of Residential Property by Non-Canadians Act. There are exceptions, for instance for some work permit holders, but they still pay the surcharges in the table. Annual property tax is charged by municipalities as a percentage of assessed value, and rates differ from city to city.

Inheritance and gifts

Canada has no inheritance or gift tax. Instead, at death the deceased is treated as having sold everything at market value, and the gain is taxed on the final return. If assets pass to a spouse, the tax is deferred. Provinces charge a fee to probate a will: in Ontario it is 1.5% of the estate value above 50,000 CAD.

Crypto

The CRA treats crypto as a commodity, not money. Tax arises on every sale and on every swap of one coin for another. One-off trades are taxed as capital gains, on half the profit. Regular trading, mining as a business and staking rewards are taxed in full as income. Canada is implementing the OECD Crypto-Asset Reporting Framework (CARF): under the government's plans, platforms collect client data from 2026, with the first exchange in 2027.

Cars

There is no annual car tax of the kind charged in many other countries: provinces charge registration and licence fees. Buyers pay GST/HST or provincial sales tax, and on a new car over 100,000 CAD a luxury tax: the lesser of 10% of the full price and 20% of the amount above 100,000 CAD.

Tax for non-residents and the Canadian departure tax

A non-resident pays Canada only on Canadian income, but collection is strict: 25% of dividends, rent and royalties is withheld before the money leaves the country. And anyone who leaves Canada pays tax on the growth of their assets, even if nothing was sold.

Withholding tax

The withholding rate (Part XIII tax, under Part XIII of the Income Tax Act) is 25%. The payer withholds it: a company on dividends, a tenant or property manager on rent, a bank or fund on pensions. Interest from an arm's-length Canadian borrower, such as a bank deposit, is generally exempt. Tax treaties reduce the rate, usually to 5-15% on dividends.

On rent from a Canadian flat, the default is 25% of the gross rent, with no deduction for expenses. It is usually better to file form NR6 and then a section 216 return: tax is then calculated on a progressive scale on net income, after mortgage interest, property tax and repairs.

A non-resident employed in Canada files a normal return and pays federal and provincial tax. The top rate on non-resident income not tied to a province is 48.8%. A foreign company with a branch in Canada pays corporate tax plus a 25% branch tax on after-tax profit, which treaties reduce.

A non-resident selling Canadian property

The buyer must hold back part of the price unless the seller has obtained a section 116 clearance certificate from the CRA. The holdback is 25% of the price, or 50% for depreciable property such as a building that was rented out. The CRA must be notified no later than 10 days after the sale. So a sale from abroad needs planning months ahead, or the money gets stuck with the tax authority.

Departure tax

On the day you cease to be a tax resident, the law treats you as having sold almost everything you own at market value. Tax on the unrealised gain goes on your final resident return. The rule covers shares and ETFs, stakes in companies, crypto and foreign real estate. Canadian real estate, RRSPs and some other assets are excluded.

If the market value of all your property on departure exceeds 25,000 CAD, form T1161 listing your assets goes with the return. Payment of departure tax can be deferred until an actual sale if you post security with the CRA. No security is required when the federal departure tax is 16,500 CAD or less.

A Canadian passport does not exempt you from departure tax, nor does it create tax obligations abroad: unlike the US, Canada taxes on residence, not citizenship. The Quebec investor programme is covered on our page on Canada citizenship by investment (QIIP), and children born in the country on the page on Canadian citizenship by birth.

Does Canada have a double tax treaty with Russia

On paper, yes; in practice, it does not work. Canada suspended the treaty in full from November 18, 2024. That was its response to Russian Presidential Decree No. 585 of August 8, 2023, under which Russia halted key articles of its treaties with 38 countries, Canada among them.

The agreement in question is the convention for the avoidance of double taxation and the prevention of fiscal evasion signed in Ottawa on October 5, 1995, together with its protocol. According to the notice from Canada's Department of Finance, the suspension covers both withholding taxes and all other taxes, and it lasts until the two governments decide otherwise.

What it means in practice

• Tax residents of Russia receive Canadian dividends, royalties and rent net of the full 25%, with no reduction.
• The rules that settled residency disputes in favour of one country no longer apply. Living in Canada while spending 183 days in Russia within 12 months can make you resident in both countries at once.
• A Canadian resident with Russian income can still credit Russian tax, but only under Canadian domestic law (section 126 of the Income Tax Act). For dividends and interest the credit is capped at 15% of the income, and any excess can only be deducted. For salary and business income the credit goes up to the Canadian tax on that income.
• Russian withholding tax on payments to Canada is also charged at general rates, without treaty relief.

The main risk in the year of the move is dual residence. If part of the year was spent in Russia and part in Canada, you will need to prove where you lived and from what date, and declare income in both countries with a credit for tax paid.

Which treaties are in force

If income comes from a country with no treaty, Canada still grants a foreign tax credit under its domestic rules, but withholding rates are not reduced. Taxes in other countries are collected on our page on taxes and tax residency.

When to file a tax return in Canada and what to do before you move

The 2026 return is due by April 30, 2027, and filing late costs at least 5% of the balance owing straight away. But the nastiest penalties in Canada are not for the tax itself - they are for undeclared foreign property.

The late-filing penalty is 5% of unpaid tax plus 1% for each full month, up to 12 months. If you are late again within three years, the rates double: 10% plus 2% a month, up to 20 months. Interest on the debt is compounded daily.

Form T1135 covers foreign bank accounts, shares, company stakes and rented-out real estate. A country house or a flat used by the family is not included. In the year you first become resident, you do not file it. The late penalty is 25 CAD a day, up to 2,500 CAD, and far more for deliberate concealment. Quebec residents file two returns: a federal one with the CRA and a provincial one with Revenu Québec.

What it means if you are moving

Canada is not a place for tax optimisation, and it is fairer to say so upfront. Top rates exceed 50% in the most popular provinces, foreign asset reporting is detailed, and leaving means paying tax on your gains. On the other hand, the rules are stable, and tax follows residence, not passport.

It suits families with children and salaried workers on average incomes: the Canada Child Benefit reaches 8,157 CAD a year for each child under six, and on an 80,000 CAD salary in Ontario about 75% is left after tax. And entrepreneurs with growing businesses who reinvest profit inside the company at 11-12%.

It does not suit those living on income from a large portfolio: it will be taxed at up to 53.5% every year and taxed again as if sold when they leave. Those planning to stay two or three years and move on. And tax residents of Russia whose main income is from Russia: without a working treaty, the risk of dual residence and double tax falls on them.

What to do before you arrive

• Receive bonuses, dividends from your own company and other income before the date you become resident: Canada does not tax them.
• Document the value of your assets on the date of the move - that becomes your new cost base.
• Choose your province with tax in mind: the gap between Alberta and Ontario on high incomes is more than 5 percentage points.
• Sort out any foreign company: a Canadian resident is taxed every year on the passive income of a controlled foreign company, even without dividends. While you remain a tax resident of Russia, controlled foreign company notifications are also filed there.

Murblz specialists review your situation before the move: residency, assets, companies and your arrival date. All immigration routes are gathered on our page on Canada: citizenship, residence, taxes and visas. A company for business in other countries is covered under company formation abroad, and legal support by Murblz specialists.

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