Canada's 2026 federal income tax brackets are out — Here's how much you'll pay next year
It's almost that time of year again! If you're trying to figure out how much of your income in 2026 will go toward taxes in Canada, you're in luck — the Canada Revenue Agency just updated the federal income tax brackets, and there are some changes that could mean a bit of relief for your wallet.
Whether you're doing early tax planning or just trying to understand where your money goes, Canada's new tax brackets could make a difference to your take-home pay.
Taxes in Canada work on a progressive system, and each bracket is now a bit higher than this year — which could help you save money if your income doesn't change much in the new year.
The CRA indexes federal tax brackets to inflation every year using data from Statistics Canada's consumer price index (CPI). For 2026, the indexation rate has just been announced as 2.0%, which means tax thresholds and credits have moved up slightly.
That's a smaller bump compared to last year's 2.7% increase — but still enough to make a difference, depending on how much you earn.
Plus, there's another major update: the lowest federal income tax rate dropped from 15% to 14% as of July 1, 2025 — a measure that was reaffirmed in this year's federal budget.
That means for the full 2026 tax year, the first portion of your income will be taxed at 14%, while in 2025, that rate will be 14.5%, since it only came into effect halfway through the year.
Here's what the CRA says Canadians can expect for federal taxes in 2026.
2026 federal tax brackets
Here's what you'll pay in federal income tax based on your taxable income in 2026:
- 14% on the first $58,523
- 20.5% on income over $58,523 up to $117,045
- 26% on income over $117,045 up to $181,440
- 29% on income over $181,440 up to $258,482
- 33% on income over $258,482
Keep in mind, these numbers only apply to federal taxes. You'll still need to add provincial or territorial tax depending on where you live in Canada — and those brackets and rates are separate.
2026 basic personal amount
Along with the brackets, the basic personal amount (BPA) — a non-refundable credit that reduces the amount of income most Canadians pay tax on, no matter their total income — has also been adjusted.
According to the CRA, the maximum BPA for 2026 is $16,452. How much you can claim depends on your income:
- If you earn $181,440 or less, you'll get the full BPA of $16,452.
- If you earn $258,482 or more, you'll get the minimum BPA of $14,829.
- If you fall in between, your BPA will fall somewhere in between as well.
If your income is at or below $16,452 for 2026, you won't pay any federal tax, since your entire income is covered by the BPA credit.
Example: How much federal tax would you owe on a $140K salary in 2026?
To illustrate how Canada's progressive tax system works in practice, let's break it down with a real example.
Let's say you earn $140,000 in taxable income in 2026. Here's what you'd owe in federal tax, before other credits or deductions besides the BPA:
- 0% on the first $16,452 (BPA) = $0
- 14% on the next $42,071 ($58,523 – $16,452) = $5,889.94
- 20.5% on the next $58,522 ($117,045 – $58,523) = $11,997.01
- 26% on the remaining $22,955 ($140,000 – $117,045) = $5,968.30
Total federal tax: $23,855.25
Don't forget, this is just federal tax — provincial tax, as well as any tax credits and deductions you're eligible for, will change the final amount.
Recap: 2025 tax brackets
To help you compare, here are the brackets for 2025. These apply to the tax return you'll file in spring 2026 for income you earned this year.
For the first half of 2025, the lowest tax rate was still 15%, but it dropped to 14% on July 1, 2025 — so the effective rate for the whole year is 14.5%.
Here's how the 2025 brackets look:
- 14.5% on the first $57,375
- 20.5% on income over $57,375 up to $114,750
- 26% on income over $114,750 up to $177,882
- 29% on income over $177,882 up to $253,414
- 33% on income over $253,414
And here's the basic personal amount for 2025:
- $16,129 if you earn $177,882 or less
- $14,538 if you earn $253,414 or more
- Adjusted gradually if you're in between
So even though the brackets and BPA for 2026 aren't wildly different, the changes — especially the new 14% tax rate — could save you some money.
What it all means
Even small shifts in tax brackets can add up over time. If your income stays the same but the thresholds go up, a bigger chunk of your earnings gets taxed at a lower rate. Combine that with credits and deductions, and you could end up with a lower tax bill — or a bigger refund — in 2026.
Understanding how tax brackets in Canada work can also help you make smarter choices about things like RRSP contributions, charitable donations and year-end bonuses. These can affect which tax bracket you land in and how much you'll actually owe come tax time.
Don't forget — every province and territory also has its own set of tax brackets and rates. Your total income tax includes both federal and provincial amounts, plus any other applicable credits and deductions.
Plus, keep in mind that the 2026 tax season is still over a year away — this spring, you'll be paying tax on your 2025 income instead.
You can check the CRA's tax page or use online tax calculators to get a more complete picture of your expected taxes for either year.
How do you feel about the 2026 tax changes?
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