Capital Gains Inclusion Rate Canada 2026 | Changes Explained
Updated
Current Capital Gains Rate: 50% for Everyone
The capital gains inclusion rate in Canada is 50% for individuals, corporations, and trusts alike. There is no threshold or tiered structure – every dollar of capital gain is taxed the same way, regardless of the size of the gain.
Taxpayer Type
Inclusion Rate
Individuals
50% (all gains)
Corporations
50% (all gains)
Trusts
50% (all gains)
What Happened to the Proposed 66.67% Rate?
The 2024 federal budget proposed increasing the inclusion rate to 66.67% (two-thirds) for individuals’ annual gains above $250,000, and to 66.67% on all gains for corporations and trusts, effective June 25, 2024. This proposal generated significant news coverage and many articles (including earlier versions of this page) described it as a settled rule. It never was:
Date
Event
April 16, 2024
Increase announced in federal budget
June 25, 2024
Proposed effective date (draft legislation only, never passed)
January 31, 2025
Effective date deferred to January 1, 2026
March 21, 2025
Government of Canada announced the increase was cancelled entirely
Because the increase was never enacted into law, the inclusion rate stayed at 50% the whole time – there was never a period where anyone actually paid tax at the 66.67% rate.
Historical Rates
Period
Inclusion Rate
2000–present
50%
1990–1999
75%
1988–1989
66.67%
Before 1988
50%
Calculation Example
Component
Amount
Calculation
Total capital gain
$400,000
Taxable capital gain
$400,000 × 50%
= $200,000
Tax Impact Example
Individual with a $300,000 Capital Gain
Factor
Amount
Capital gain
$300,000
Taxable capital gain (50%)
$150,000
At 45% marginal rate
$67,500 tax
Effective rate on gain
22.5%
Primary Residence Exemption
Still Tax-Free
Rule
Status
Primary residence exemption
✅ Unaffected by the cancelled proposal
One per family
Still applies
Years of ownership
Calculate PRE formula
Formula Still Applies
Variable
Meaning
(1 + years as PR)
Numerator
Years owned
Denominator
× Capital gain
= Exempt portion
Strategies to Minimize Tax
Since there is no $250,000 threshold to manage, the main levers for reducing capital gains tax are unrelated to the size or timing of a single year’s gains:
Capital Gains Reserve
Rule
Details
What it does
Spreads gain over up to 5 years
When available
If payment received over time
Maximum deferral
5 years (20% minimum/year)
Example: $500K Over 5 Years
Year
Minimum to Report
Taxable at 50%
1
$100,000
$50,000
2
$100,000
$50,000
3
$100,000
$50,000
4
$100,000
$50,000
5
$100,000
$50,000
Each year’s taxable amount is smaller, which can help manage which tax bracket the gain lands in, but no threshold needs to be avoided since the rate is flat.
Spousal Strategies
Strategy
Benefit
Both spouses hold assets
Each reports gains at their own marginal rate
Gift before sale
Attribution rules apply
Joint ownership
Split gains between two lower marginal rates
Corporate Structure
Consideration
Details
Corps pay 50% inclusion on all gains
Same flat rate as individuals
Integration
Should net similar to personal
But timing
Corporate rate lower initially
Lifetime Capital Gains Exemption (LCGE)
Still Available
Asset Type
2025 LCGE Amount
QSBC shares
$1,016,836
Farm property
$1,016,836
Fishing property
$1,016,836
A separate proposed benefit, the Canadian Entrepreneurs’ Incentive, would have added a further reduced-inclusion-rate exemption on top of the LCGE, phased in from 2025 through 2029. It was cancelled along with the broader capital gains changes and is not available.