2026 Tax Brackets Canada: What Changes, What Stays the Same
TaxCalc Canada Editorial
Published May 8, 2025 · Projections based on CRA's annual indexation methodology
Every November, CRA quietly releases the next year's tax bracket thresholds. Most Canadians don't notice — their employer just updates the payroll software. But if you're planning a raise negotiation, a major RRSP contribution, or a contract rate, knowing where the 2026 thresholds will land matters. Here's what we know now.
The Canadian federal income tax system has five brackets with rates of 15%, 20.5%, 26%, 29%, and 33%. These rates have not changed since 2016 and are not expected to change in 2026 absent new budget legislation. What does change every year is the income threshold at which each rate kicks in — and that adjustment is mechanical, driven by a formula, not a political decision.
2026 projections on this page are estimates. Official 2026 thresholds will be confirmed by CRA in November 2025. The projection methodology uses the CPI-based indexation factor — historically accurate to within $200–$400 on each threshold. Check back here after November 2025 for confirmed figures.
Quick Answer
2026 federal tax rates stay at 15%–33%. The thresholds shift upward by approximately 2.7% from 2025 levels due to CPI indexation. The first bracket threshold rises from $57,375 to approximately $58,923. The federal basic personal amount rises from $16,129 to approximately $16,564.
How Annual Indexation Works
Canada's federal tax brackets have been indexed to inflation since 2000. The indexation factor is calculated using the percentage change in the average CPI (Consumer Price Index) from October of two years prior to October of the prior year. For 2025, the factor was 2.7%.
Every indexed amount — bracket thresholds, basic personal amount, age amount, disability amount, and others — is multiplied by one plus the indexation factor and rounded to the nearest dollar. CRA publishes a full table of adjusted amounts in November, which you can find in the T4032 Payroll Deductions Tables.
The purpose is simple: if your salary increases at the rate of inflation, you should not pay a higher effective tax rate. Without indexation, a 3% inflation-matching raise would push some income into a higher bracket — “bracket creep” — collecting more tax without collecting more real income.
2025 Confirmed Federal Brackets
These are the confirmed 2025 federal tax brackets — the baseline from which 2026 projections are made.
| 2025 Taxable Income | Federal Rate |
|---|---|
| $0 – $57,375 | 15% |
| $57,375 – $114,750 | 20.5% |
| $114,750 – $158,519 | 26% |
| $158,519 – $220,000 | 29% |
| $220,000 – and over | 33% |
Source: CRA confirmed 2025 federal income tax brackets. Federal BPA: $16,129.
2026 Projected Brackets
Based on a projected 2.7% CPI indexation factor, the 2026 federal bracket thresholds are estimated as follows. These are not confirmed figures.
| 2026 Projected Taxable Income | Federal Rate | 2025 Threshold |
|---|---|---|
| $0 – $58,923 | 15% | $0 – $57,375 |
| $58,923 – $117,847 | 20.5% | $57,375 – $114,750 |
| $117,847 – $162,839 | 26% | $114,750 – $158,519 |
| $162,839 – $225,940 | 29% | $158,519 – $220,000 |
| $225,940 – and over | 33% | $220,000 – and over |
Projections only. Projected 2026 BPA: ~$16,564 (up from $16,129 in 2025). Official confirmation expected November 2025.
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CPP and EI Outlook for 2026
Unlike income tax brackets, CPP and EI parameters are set by separate legislation and bodies.
| Parameter | 2025 (Confirmed) | 2026 (Projected) |
|---|---|---|
| CPP employee rate | 5.95% | 5.95% (no change) |
| CPP max pensionable earnings | $71,300 | ~$73,200 |
| CPP max employee contribution | $4,034.10 | ~$4,137 |
| CPP2 rate | 4.00% | 4.00% (no change) |
| EI employee rate | 1.64% | TBD (announced Sep/Oct 2025) |
| EI max insurable earnings | $65,700 | ~$67,400 |
| EI max premium | $1,077.48 | ~$1,105 (estimate) |
For a detailed breakdown of how CPP works and what you'll receive in retirement, see the CPP contributions guide.
What Actually Changes on Your Paycheque
For most Canadian workers, the year-over-year change from bracket indexation is modest. On a $70,000 salary, moving the first bracket threshold from $57,375 to $58,923 means approximately $1,548 more income taxed at 15% instead of 20.5% — a saving of roughly $85/year, or about $3.25 per biweekly paycheque.
The bigger changes come from CPP maximum earnings adjustments. If the ceiling rises from $71,300 to $73,200, earners between those thresholds will pay CPP on $1,900 more of income — adding about $113 in annual contributions. This partially offsets the income tax saving from bracket indexation.
The practical upshot: a $70,000 earner in Ontario in 2026 will likely pay about $50–$100 less in combined income tax than in 2025 on the same nominal income, before accounting for CPP changes. Indexation is a small benefit — it prevents things from getting worse, rather than making them significantly better.
Provincial Brackets for 2026
Provincial bracket indexation varies. Most provinces index to either the federal CPI factor or their own provincial CPI. Some do not index at all.
| Province | Indexation Policy |
|---|---|
| Ontario | Annual CPI indexation |
| Alberta | Annual CPI indexation |
| BC | Annual CPI indexation |
| Quebec | Annual indexation |
| Manitoba | Limited indexation (partial) |
| Nova Scotia | No annual indexation |
| PEI | No annual indexation |
For province-specific 2025 confirmed brackets, read the guides for Ontario, Alberta, and Nova Scotia.
Frequently Asked Questions
What are the 2026 federal tax brackets in Canada?
The official 2026 federal tax brackets have not been announced yet — CRA publishes confirmed rates in November each year. Based on the annual CPI indexation formula (~2.7% for 2026), the projected thresholds are: 15% on the first ~$58,923; 20.5% on $58,923–$117,847; 26% on $117,847–$162,839; 29% on $162,839–$225,940; 33% above $225,940. Rates themselves (15%, 20.5%, 26%, 29%, 33%) do not change — only the thresholds shift.
Do Canadian tax rates change every year?
The rate percentages (15%, 20.5%, 26%, 29%, 33%) are set by Parliament and rarely change without budget legislation. What changes automatically every year is the income thresholds — they are indexed to inflation using the CPI-based indexation factor. In 2025 the indexation factor was 2.7%. The result is that the same real income in 2026 faces slightly lower effective tax than in 2025, offsetting some inflation.
Will the basic personal amount change in 2026?
Yes. The federal basic personal amount is also indexed to inflation. In 2025 it is $16,129. For 2026, a 2.7% indexation would bring it to approximately $16,564. The enhanced BPA (available to lower-income Canadians) phases out above $173,205 and the threshold also adjusts annually.
Will CPP contributions change in 2026?
CPP contribution rates are set by the Canada Pension Plan legislation. The employee rate of 5.95% is not expected to increase in 2026 — the rate phase-in from the CPP enhancement concluded in 2023. The maximum pensionable earnings ceiling ($71,300 in 2025) will increase with average wage growth, likely to approximately $73,200–$74,500. Maximum contributions will rise proportionally.
Will EI premiums change in 2026?
EI premium rates are set annually by the Canada Employment Insurance Commission. The 2025 rate is 1.64%. The 2026 rate is typically announced in September or October of the prior year. The rate can increase or decrease based on the EI fund balance. Maximum insurable earnings also adjust annually based on the Industrial Aggregate Wage, likely moving to approximately $67,400–$68,000 in 2026.
How does bracket indexation benefit Canadian taxpayers?
Without indexation, a 3% raise that keeps pace with inflation would push a portion of your income into a higher bracket — creating "bracket creep" where your real purchasing power stays flat but your tax bill rises. Indexation prevents this by raising the thresholds in line with inflation, so a cost-of-living raise does not result in a higher effective tax rate.
When will the official 2026 tax brackets be confirmed?
CRA publishes the official indexed amounts for the following year in November. The 2026 confirmed brackets will appear on the CRA website and in the T1 General tax guide in November 2025. Payroll systems and employers update their withholding calculations at the start of each calendar year based on those confirmed figures.
TaxCalc Canada Editorial Team
We research Canadian tax rules so you don't have to read the CRA website at midnight. All confirmed rates are verified against official CRA publications before publishing.