Prince Edward Island’s 2026 tax year brings the province’s first indexed brackets and a bigger tax-free amount. The five rates of 9.5%, 13.47%, 16.6%, 17.62%, and 19% are unchanged from 2025, but every threshold rose by 1.8% under the indexation announced in the 2025 provincial budget. The first bracket now runs to $33,928, up from $33,328. The basic personal amount rises to $15,000, up from $14,650, continuing the province’s multi-year BPA increases.
The change matters more than its size suggests. PEI spent years without inflation protection on its brackets, which meant an Islander whose salary merely kept pace with inflation drifted into higher provincial brackets anyway. Indexation stops that. The provincial factor of 1.8% does sit below the federal 2% for 2026, so bracket creep is reduced rather than eliminated outright.
High earners should plan ahead: PEI’s 2026 Budget introduced a new 20% bracket on income over $200,000, effective 2027. That will lift the top combined federal-provincial marginal rate from 52% in 2026 to 53% in 2027, making 2026 the last year at the current top rate. If you have flexibility over timing bonuses, capital gains, or RRSP withdrawals above the $200,000 line, realizing income in 2026 rather than 2027 saves a full percentage point.
The federal side softens the picture: the bottom federal rate is 14% for all of 2026, and PEI no longer levies a provincial surtax. Check your complete 2026 liability with our PEI Tax Calculator.
2026 Federal and pe Tax Brackets and Tax Rates
2025 Federal and pe Tax Brackets and Tax Rates
Note: PEI began indexing its tax brackets in 2026, with thresholds raised by 1.8% over 2025 as announced in the 2025 provincial budget. The basic personal amount increased to $15,000 effective January 1, 2026.
Note: A new 20% provincial bracket on income over $200,000 takes effect in 2027, raising the top combined rate to 53%.
Note: Top combined federal + PEI marginal rate for 2026: 52% on income above $258,482.
Sources: CRA Payroll Deductions Tables (PEI, 2026) · Doane Grant Thornton, PEI Budget 2026
Last Updated: August 31, 2026