- The basic personal amount rose to ~$16,800, reducing taxes modestly for all Canadians
- Capital gains inclusion rate remains 50% for everyone – the 2024 proposal to raise it to 66.67% was cancelled in March 2025 and never took effect
- 30-year insured mortgage amortizations confirmed for first-time buyers and new builds
- Canada Child Benefit indexed upward by CPI — higher payments from July 2026
- TFSA limit unchanged at $7,000/year — cumulative room reaches $102,000 for eligible Canadians
- The Housing Accelerator Fund received additional funding to accelerate municipal approvals
Every federal budget reshapes the personal finance landscape for Canadians — changing what you pay in taxes, what benefits you receive, and what financial tools are available to you. The 2026 federal budget arrived in a politically and economically charged environment, with US tariff impacts, a federal election period, and ongoing affordability concerns shaping the government’s priorities.
Here is a plain-language breakdown of the changes most likely to affect your wallet.
Income tax changes
Basic personal amount increase
The basic personal amount (BPA) — the amount of income every Canadian can earn without paying federal income tax — increased to approximately $16,800 for 2026, up from $15,705 in 2023 under the prior government’s schedule. This provides a federal tax saving of approximately $252/year at the lowest tax bracket rate.
For lower-income Canadians, this is the single most impactful change in the budget — especially combined with provincial BPA increases.
Bracket indexation
All federal income tax brackets are indexed annually to inflation. For 2026, with CPI indexation of approximately 2.7%, bracket thresholds shift to:
| Tax Bracket | 2025 Threshold | 2026 Threshold | Rate |
|---|---|---|---|
| Bottom bracket | Up to $57,375 | Up to ~$58,900 | 15% |
| Second bracket | $57,376–$114,750 | ~$58,901–$117,900 | 20.5% |
| Third bracket | $114,751–$158,519 | ~$117,901–$162,832 | 26% |
| Fourth bracket | $158,520–$220,000 | ~$162,833–$225,940 | 29% |
| Top bracket | Over $220,000 | Over $225,940 | 33% |
Exact 2026 amounts will be confirmed in the final CRA T1 Guide.
Bracket indexation ensures that income growth matching inflation does not push you into a higher bracket — preventing what economists call “bracket creep.” In 2026, this adjustment is particularly significant given elevated shelter and food inflation.
Capital gains inclusion rate (unchanged at 50%)
The 2024 federal budget proposed raising the capital gains inclusion rate from 50% to 66.67%, but the Government of Canada cancelled that increase entirely on March 21, 2025. The 2026 budget did not revisit the proposal — the inclusion rate remains 50% for everyone:
| Situation | Inclusion Rate | Effective Tax Rate (top federal bracket) |
|---|---|---|
| Individuals: all capital gains | 1/2 (50%) | ~16.5% federal |
| Corporations: all capital gains | 1/2 (50%) | ~16.5% federal |
| Trusts: all capital gains | 1/2 (50%) | ~16.5% federal |
| Small business lifetime capital gains exemption | Increased to $1.25M for qualifying small business shares | N/A |
Because the increase was never enacted into law, there is no $250,000 threshold and no tiered structure — every dollar of capital gain, for individuals, corporations, and trusts alike, is included at the same flat 50% rate.
Note on principal residence: Your primary home remains fully exempt from capital gains tax under the principal residence exemption — this has not changed.
Housing measures
30-year amortizations confirmed and expanded
The 30-year insured mortgage amortization — introduced in 2024 for first-time buyers purchasing new builds — was confirmed and slightly expanded. As of 2026:
- First-time buyers purchasing any property (not just new builds) can access insured mortgages with 30-year amortization
- Any buyer purchasing a newly constructed home can access 30-year insured amortizations
This reduces monthly mortgage payments compared to the prior 25-year maximum for insured mortgages:
| Purchase Price | Rate | 25-Year Payment | 30-Year Payment | Monthly Saving |
|---|---|---|---|---|
| $500,000 | 5.5% | $3,060 | $2,740 | $320 |
| $650,000 | 5.5% | $3,978 | $3,560 | $418 |
| $800,000 | 5.5% | $4,895 | $4,383 | $512 |
Lower payments allow more households to qualify for mortgage financing — though the total interest paid over a 30-year term is significantly higher than a 25-year amortization.
Housing Accelerator Fund: additional $1.5B
The 2026 budget added $1.5B to the Housing Accelerator Fund (HAF), which provides federal funding to municipalities that remove zoning barriers, streamline permit approvals, and meet housing supply targets. The fund has approved thousands of new housing units in participating cities since its 2023 creation.
For homebuyers, this accelerates housing supply growth over the next 5–10 years — which should provide gradual price relief in undersupplied markets.
Home Buyers’ Plan (HBP) limit confirmed at $60,000
The HBP limit — raised to $60,000 in the 2024 budget — remains at $60,000 in 2026. This allows first-time buyers to withdraw up to $60,000 tax-free from their RRSP for a home purchase (repayable over 15 years without penalty). Combined with a partner, couples can access up to $120,000 from RRSPs.
First Home Savings Account (FHSA): unchanged
The FHSA — introduced in 2023 — continues at its original contribution limit of $8,000/year and $40,000 lifetime maximum. There were calls to increase the FHSA limit, but the 2026 budget did not change these amounts.
| FHSA Detail | Amount |
|---|---|
| Annual contribution limit | $8,000 |
| Lifetime contribution limit | $40,000 |
| Tax deduction | Same as RRSP — reduces taxable income |
| Withdrawal for home purchase | Tax-free |
| Carry-forward | Up to $8,000 from prior year |
Family benefits
Canada Child Benefit (CCB): CPI-indexed increase
The CCB is indexed to CPI annually. With approximately 2.7% inflation indexation, 2026-27 CCB maximum amounts are approximately:
| Situation | 2025-26 Maximum | 2026-27 Maximum |
|---|---|---|
| Children under 6 | $7,437/year | ~$7,638/year |
| Children 6–17 | $6,275/year | ~$6,445/year |
Benefit increases take effect in July following the filing of 2025 taxes (for the 2026-27 benefit year). File your 2025 taxes on time to ensure you access the updated benefit amounts immediately.
Canada Workers Benefit (CWB): expanded phase-out range
The CWB received a modest expansion to its phase-out range — meaning the income level at which benefits begin tapering off was raised slightly. This allows working Canadians at the margin of eligibility (previously phased out around $24,000 for singles) to retain more benefit as their income grows toward $30,000.
The practical benefit is approximately $100–$300/year for the marginal group affected.
Retirement and savings
RRSP contribution limit
RRSP contribution room is 18% of the prior year’s earned income, capped at the annual maximum. The RRSP maximum increases annually:
| Year | RRSP Contribution Limit |
|---|---|
| 2024 | $31,560 |
| 2025 | $32,490 |
| 2026 | ~$33,400 |
The 2026 RRSP limit was increased consistent with indexation. The final amount will be confirmed by the CRA in fall 2025.
TFSA contribution limit: unchanged at $7,000
The TFSA annual limit remains $7,000 for 2026. The limit is indexed to inflation in $500 increments — waiting until inflation cumulatively pushes past the threshold. As of 2026, cumulative Canadian lifetime TFSA room is:
| Year You Turned 18 | Total TFSA Lifetime Room (2026) |
|---|---|
| 2009 or before | $102,000 |
| 2010 | $94,500 |
| 2015 | $67,500 |
| 2020 | $42,000 |
| 2024 | $14,000 |
| 2025 | $7,000 |
OAS and GIS: automatic inflation increases
Old Age Security (OAS) and the Guaranteed Income Supplement (GIS) are indexed quarterly to CPI. No budget changes were required — these increases are automatic. In 2026, OAS payments for 65–74-year-olds are approximately $720/month; those 75+ receive a 10% top-up (~$790/month).
Small business measures
Lifetime Capital Gains Exemption (LCGE): $1.25M
The LCGE for qualifying small business corporation shares increased to $1.25 million — providing significant tax relief to business owners selling their companies. This means the first $1.25M of capital gains from the sale of qualifying shares is exempt from capital gains tax, subject to meeting the Qualified Small Business Corporation (QSBC) rules.
Canadian Entrepreneurs’ Incentive (CEI): cancelled
The CEI was proposed in the 2024 budget as a reduced capital gains inclusion rate (1/3, or 33.3%, versus the standard 50%) for a further $2M in eligible capital gains from the sale of a business, stacking on top of the LCGE. It was cancelled along with the broader capital gains inclusion rate increase and is not available – do not plan around it.
CCB / corporate tax rates: unchanged
The small business deduction threshold (income taxed at 9% federal rate) remains at $500,000 taxable active income, phased out above $10M to $15M in associated company passive income. No changes to the general corporate rate (15%) or small business rate (9%).
Environmental measures
Canada Carbon Rebate (CCR): confirmed for 2026-27
The carbon levy continues and the corresponding Canada Carbon Rebate amounts for 2026-27 were updated. Families in provinces under the federal backstop receive quarterly deposits. The per-household amounts were increased for most provinces to reflect higher levy rates.
| Province | 2025-26 Annual CCR (family of 4) | 2026-27 Annual CCR (family of 4) |
|---|---|---|
| Alberta | $1,544 | ~$1,620 |
| Ontario | $976 | ~$1,024 |
| Manitoba | ~$1,056 | ~$1,100 |
| Saskatchewan | $1,504 | ~$1,580 |
Rural supplement recipients receive an additional 20% top-up.
What the budget does NOT change
To avoid confusion, these things were not changed in the 2026 budget:
- TFSA annual contribution limit (remains $7,000)
- FHSA contribution limit (remains $8,000/year)
- Capital gains exemption on principal residence
- Capital gains inclusion rate (remains 50% flat — the 2024 proposal to raise it to 66.67% was cancelled in March 2025 and never took effect)
- CPP contribution rates (already legislated under CPP enhancement schedule)
- EI premium rates (set separately by ESDC)
- GST rate (remains 5% federal)
Budget impact summary by taxpayer profile
| Profile | Main Impact | Estimated Annual Effect |
|---|---|---|
| Typical employed worker, $60K income | BPA increase + bracket indexation | +$150–$250 tax saving |
| Family with 2 young children, $95K household | CCB indexation increase | +$300–$400/year more CCB |
| First-time homebuyer | 30yr amortization access | ~$300–$500/month lower payment |
| Small business owner selling business | $1.25M LCGE (CEI proposed but cancelled) | Potentially $100K–$250K+ in sheltered gains from the LCGE alone |
| Investor with large capital gains | No change — flat 50% inclusion rate | Proposed 66.67% rate above $250K was cancelled in March 2025 |
| Seniors (65+) | OAS indexed automatically | ~$15–$25/month higher OAS |
| Low-income worker | CWB expanded phase-out | +$100–$300/year |