Capital Gains Inclusion Rate 2026: Still 50%

How we check the numbers: every figure on this page is calculated from official CRA, Statistics Canada or Bank of Canada data and cross-checked with the free calculators on this site — run them yourself to verify.

The short version

The inclusion rate is the share of a capital gain that becomes taxable income. At 50%, a $100,000 gain adds $50,000 to your income. Your marginal tax rate then decides the tax bill. There is no $250,000 cliff in 2026, and no second tier for large gains.

How the 50% formula works

Three steps, in order:

1. Find the gain. Capital gain = proceeds of disposition − adjusted cost base − outlays and expenses of the sale.
2. Apply the inclusion rate. Taxable capital gain = 50% × net capital gain (gains minus losses for the year).
3. Apply your marginal rate. Tax = taxable capital gain × your marginal tax rate. That rate depends on your total income and your province.

The same 50% fraction applies to losses. A $60,000 capital loss gives a $30,000 allowable capital loss, which offsets gains in the same year, can be carried back 3 years, or carried forward indefinitely.

Worked examples: the same gain, three sizes

*Illustration only, not your rate. $50,000 × 40% = $20,000, which is 20% of the whole $100,000 gain. At a 30% marginal rate the same gain would cost $15,000.

Now compare the cancelled proposal on a $400,000 gain. Under it, the first $250,000 would be included at 50% ($125,000) and the remaining $150,000 at 66.67% ($100,000) — $225,000 taxable in total. That is $25,000 more taxable income than the current $200,000. At a 40% marginal rate, that would have meant $10,000 more tax. That extra bill is the amount the cancellation saved on a gain of this size.

Timeline: proposed, deferred, cancelled

• Budget 2024 (April 2024). Proposed raising the inclusion rate from 50% to 66.67% on individual gains above $250,000 a year, and on all gains of corporations and most trusts, for gains realized on or after June 25, 2024.
• January 31, 2025. The Department of Finance deferred the start date to January 1, 2026. The CRA reverted to administering the enacted rate of one-half.
• March 21, 2025. Prime Minister Mark Carney announced the government would cancel the proposed hike. Because the deferred start date was later than the cancellation, the two-thirds rate never took effect for anyone.
• Budget 2025 (November 4, 2025). Formally confirmed the cancellation. The Canadian Entrepreneurs' Incentive — a proposed one-third inclusion rate on up to $2 million of eligible gains — was also cancelled and will not be introduced.

The lesson for planners: a budget proposal is not law until it is enacted. People who rushed sales, restructured holdings, or filed at the higher rate in anticipation spent over a year planning around a rate that never arrived. Corporations that filed at two-thirds are covered by CRA corrective reassessments.

What survived, and what still gets taxed

What survived the cancellation

• Lifetime Capital Gains Exemption (LCGE). The increase kept in the March 2025 announcement was $1,250,000 for qualifying small business shares and farm or fishing property. With indexation resumed in 2026, it is reported at $1,275,000 for 2026. At 50% inclusion, the maximum LCGE deduction is $637,500.
• Principal residence exemption. A qualifying principal residence is fully exempt. The inclusion rate never touches it — but you must still report the sale.
• Registered accounts. Gains inside a TFSA, RRSP or RESP are sheltered while they stay in the account. The inclusion rate applies to non-registered assets.

What still gets taxed at 50%

• Non-registered investments. Stocks, ETFs, mutual funds and bonds held outside registered accounts.
• Cottages and second properties. A cottage that is not your designated principal residence is taxed like any other capital property.
• Rental and vacant land. Same 50% inclusion. Note separately: any capital cost allowance recapture on a rental is fully taxable as income, not at 50%.
• Corporations and trusts. The same 50% rate as individuals in 2026 — the proposal to tax all of their gains at 66.67% died with the rest of the measure.

Before you sell: a short checklist

1. Check your adjusted cost base first. Missing purchase records inflate the gain. Brokerage statements and T5008 slips are your starting point.
2. Net your losses. Losses in the same year reduce the gain before the 50% rate is applied. Unused losses carry back 3 years or forward indefinitely.
3. Watch the 30-day superficial loss rule. Buy back the same or identical property within 30 days before or after the sale and the CRA can deny the loss.
4. Do not assume the old proposal applies. If old notes, software defaults or articles still show 66.67% or a $250,000 threshold, delete them. They describe a proposal that was cancelled.
5. Report on Schedule 3. The taxable capital gain goes to line 12700 of your return.

Sources

• Prime Minister of Canada — Prime Minister Carney cancels proposed capital gains tax increase (March 21, 2025)
• Canada Revenue Agency — Update on the CRA's administration of the proposed capital gains taxation changes (January 31, 2025)
• Kenway Mack Slusarchuk Stewart LLP — Capital Gains Inclusion Rate: The Final Word (September 25, 2026)
• Wealthsimple — Capital gains tax in Canada: how it works in 2026

Educational content only — not financial advice. Figures are estimates; confirm your own situation with the CRA or a licensed financial advisor. See our Disclaimer.