CRA Released The New Tax Numbers For 2026. Here’s What You Need To Know For Next Year

The Canada Revenue Agency (CRA) has released its updated 2026 tax figures, outlining new income limits, credit amounts, and contribution rates that will affect millions of taxpayers next year.

These changes are based on Canada’s annual inflation-indexing formula, which adjusts federal tax brackets and benefits.

While some tax thresholds have increased, other limits remain unchanged going into 2026.
Here is a clear breakdown of what’s changing and how these updates could impact your finances.

Inflation Adjustment For 2026

Each year, most federal tax and benefit amounts are indexed to inflation.
For 2026, the CRA has set the indexation factor at 2%, down from 2.7% last year.

• Updated tax brackets and non-refundable credits take effect January 1, 2026.
• Increased amounts for GST/HST Credit and Canada Child Benefit (CCB) will apply from July 1, 2026, aligning with the new benefit year.

Updated Federal Tax Brackets For 2026

The federal government uses five tax brackets, all of which have been increased using the 2% indexation rate.

2026 Federal Tax Brackets:

• Up to $58,523 → 15%
• $58,523 – $117,045 → 20.5%
• $117,045 – $181,440 → 26%
• $181,440 – $258,482 → 29%
• Above $258,482 → 33%

Every province sets its own provincial tax brackets, with most also adjusting them using provincial inflation factors.

Basic Personal Amount (BPA) For 2026

The Basic Personal Amount, which determines how much income you can earn tax-free, continues to rise.

• The 2026 BPA is $16,452.
• Individuals can earn this amount before paying any federal income tax.

For 2026, the value of the federal credit is calculated using the lowest tax rate, which drops to 14%, making the credit worth $2,303.

Income-Based Reduction

Higher-income earners won’t receive the full enhanced BPA:

• Reduction begins at $181,440 of net income
• Fully phased out after $258,482

Those above this threshold will still receive the old BPA, indexed to inflation, set at $14,829 for 2026.

Canada Pension Plan (CPP) Contributions

Regular CPP (CPP1)

For 2026:

• Employee/Employer rate: 5.95%
• YMPE (first earnings ceiling): $74,600
• Basic exemption: $3,500
• Max CPP contribution:
  • Employee: $4,230.45
  • Employer: $4,230.45
  • Self-employed: $8,460.90

Second CPP Tier (CPP2)

Introduced in 2024, CPP2 applies to income above the first earnings ceiling.

For 2026:

• Second earnings ceiling (YAMPE): $85,000
• Income between $74,600 and $85,000 is subject to CPP2
• Contribution rates:
  • Employee/Employer: 4% (max $416 each)
  • Self-employed: 8% (max $832)

Employment Insurance (EI) Premiums

EI rates are also increasing:

• Employee premium: 1.64% (1.30% in Quebec)
• Max insurable earnings: $68,900
• Maximum EI contribution:
  • $1,123.07 (Canada)
  • $895.70 (Quebec)

Tax-Free Savings Account (TFSA) Limit for 2026

The TFSA contribution limit stays at $7,000 for 2026.

The indexed amount reached $7,185, but TFSA limits only rise in $500 steps, so it remains unchanged.

RRSP Contribution Limit for 2026

RRSP room continues to increase:

• 2026 RRSP limit: $33,810 (up from $32,490 in 2025)
• You may contribute 18% of your 2025 earned income up to this limit.

Unused RRSP room from previous years can also be applied.

Old Age Security (OAS) Threshold for 2026

For seniors receiving OAS, the clawback level has been updated:

• OAS repayment threshold for 2026: $95,323
  If your net income exceeds this amount, your OAS payments will be reduced.

Prescribed Interest Rate for Early 2026

The CRA’s prescribed interest rate will remain unchanged for Q1 2026.

• Base rate: 3%
• Tax refund rate: 5%
• Interest on tax debt: 7%

This rate applies to unpaid taxes, CPP contributions, EI premiums, and related penalties.

The CRA’s updated 2026 tax numbers will influence how much Canadians pay in taxes, how much they can contribute to savings plans, and how benefits like OAS, CPP, EI, TFSA, and RRSP are calculated.

With inflation moderating, most tax brackets and credits have been adjusted modestly, ensuring taxpayers receive some relief.

Understanding these updated limits can help Canadians plan their finances, maximize deductions, and reduce unexpected taxes in the year ahead.

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