Canada’s federal income tax brackets are changing in 2026
Global News
Changes could be coming next year for Canadian taxpayers that could see some paying less income tax as the result of a cut to the lowest income bracket.
Changes could be on the way for federal income tax brackets next year, according to the Canada Revenue Agency.
If the legislation working its way through Parliament becomes law, the proposed changes would mean Canada’s lowest earners may pay slightly less income tax starting in 2026.
Some income tax cuts were introduced prior to the summer of 2025 by the federal government, and the new changes would essentially apply the same cut for the entire tax year.
Prime Minister Mark Carney’s so-called “middle-class tax cut” introduced in the spring proposed dropping the federal income tax from 15 per cent to 14 per cent for the lowest tax bracket.
In 2025, that lowest bracket covered the first $57,375 of taxable income.
Starting in 2026, that will adjust to reflect the indexed inflation rate.
In 2026, the lowest income tax bracket will cover the first $58,523 of income.
The second level of tax bracket in 2025 applied a tax rate of 20.5 per cent to the portion of income that falls between $57,375 and $114,750. In 2026, that bracket and rate will cover the portion of income between $58,523 and $117,045.
