Sisi Chan

Canada’s federal income tax brackets are changing in 2026

On The Horizon: The Canada Revenue Agency announces potential revisions to federal income tax brackets, set to take effect in 2026.

The Catalyst: Proposed legislation hints at decreased income tax for Canada’s lowest earners from 2026 onwards.

Prior to this, the federal government had rolled out tax cuts, which the proposed changes seem poised to expand.

Historical Context: An overview of the ‘middle-class tax cut’ follows, clarifying the coverage of the lowest tax bracket in 2025 at 15%, and future coverage at 14% for those earning less than $57,375.

In 2026, with respect to the inflation rate index, a rise in the lowest bracket to $58,523 is being considered.

Zooming Out: Income levels and taxing rates for the second to fifth tax brackets in 2025 and 2026 have been outlined in detail.

Taxes are calculated annually based on these stipulations, according to the Canada Revenue Agency. For 2025, the rate is 14.5%, projected to drop to 14% in 2026.

Expert’s Take: Ryan Minor, an expert from Chartered Professional Accountants Canada, interprets how inflation rate variations factor in the proposed tax bracket modifications.