The Canada Revenue Agency (CRA) has confirmed the federal personal income tax brackets for the 2026 tax year, reflecting annual indexation for inflation and the continuation of previously legislated tax rate changes. These updates apply to income earned from January 1, 2026, onward and will affect federal tax payable by Canadian residents across all income levels.
This article provides a structured overview of the 2026 federal tax brackets in Canada, the CRA indexation factor, and the updated Basic Personal Amount (BPA). It also outlines the practical implications for federal tax calculations, while noting the interaction with provincial and territorial income taxes.
2026 Federal Tax Brackets Canada (CRA Confirmed)
For the 2026 tax year, the CRA has set the following federal marginal tax brackets:
| Taxable Income Range (2026) | Federal Tax Rate |
|---|---|
| Up to $58,523 | 14% |
| $58,523 – $117,045 | 20.5% |
| $117,045 – $181,440 | 26% |
| $181,440 – $258,482 | 29% |
| Over $258,482 | 33% |
These thresholds represent an approximate 2.0% increase over 2025 levels, consistent with the CRA’s annual inflation adjustment mechanism.
CRA Inflation Indexation Factor for 2026
The CRA applies annual indexation to federal tax brackets and selected credits using the Consumer Price Index (CPI). For the 2026 tax year, the confirmed indexation factor is 2.0%.
Indexation applies to:
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Federal tax bracket thresholds
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The Basic Personal Amount
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Certain non-refundable tax credits
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Benefit thresholds (e.g., CCB income limits)
This adjustment is designed to prevent inflation-driven bracket creep, where nominal income growth results in higher taxation without an increase in real purchasing power.
Lowest Federal Tax Rate Reduction (14%)
The lowest federal personal income tax rate applicable in 2026 is 14%, reduced from the long-standing 15% rate.
This reduction was legislated in 2025 and applies fully in 2026. As a result:
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All taxpayers benefit from a lower tax rate on the first $58,523 of taxable income.
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The effective tax relief is uniform across income levels, though proportionally more significant for low- and middle-income earners.
No other federal marginal tax rates were changed for 2026.
Canada Basic Personal Amount 2026
The Basic Personal Amount (BPA) for the 2026 tax year has increased to:
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$16,452 (maximum)
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$14,829 (minimum, for higher-income individuals)
The BPA represents the portion of income that is effectively exempt from federal tax through a non-refundable tax credit applied at the lowest marginal rate.
BPA Phase-Out Thresholds
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Full BPA applies to individuals with net income up to $181,440
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Partial BPA applies between $181,440 and $258,482
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Minimum BPA applies above $258,482
The federal tax value of the BPA in 2026 ranges from approximately $2,076 to $2,303, depending on income level.
Federal vs Provincial Tax Brackets in 2026
The tax brackets listed above apply only to federal income tax. Provincial and territorial governments maintain separate marginal tax systems, with their own brackets and rates.
As a result:
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Total income tax payable is the combined effect of federal and provincial tax calculations.
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Provincial indexation policies vary by jurisdiction.
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Net income outcomes differ materially across provinces.
For province-specific thresholds and marginal rates, refer to:
Practical Implications for 2026 Tax Calculations
From a calculation and payroll perspective, the 2026 updates result in:
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Slightly lower federal tax payable for unchanged income levels
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Adjusted withholding calculations beginning January 2026
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Updated CPP and EI contribution ceilings, though contribution rates remain unchanged
Employers will apply updated CRA payroll tables automatically. Individuals calculating estimated tax liability or planning contributions (e.g., RRSPs) should ensure 2026 thresholds are used.
To model federal and provincial tax outcomes using the updated thresholds:
Summary: 2026 Canada Federal Tax System Update
Key confirmed changes for the 2026 tax year include:
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Federal tax brackets indexed upward by 2.0%
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Lowest marginal tax rate set at 14%
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Basic Personal Amount increased to $16,452
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No changes to upper marginal tax rates
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Continued separation of federal and provincial tax systems
These updates reflect standard CRA indexation practices and previously enacted legislative changes rather than new tax policy initiatives.