Canada Money Tools guide

Canada Federal Tax Brackets 2026

A plain-English overview of the 2026 federal income-tax brackets.

2026 federal brackets

Taxable income	Rate
First $58,523	14%
$58,523 – $117,045	20.5%
$117,045 – $181,440	26%
$181,440 – $258,482	29%
Over $258,482	33%

These are federal rates only — your province adds its own brackets on top. Only the income inside each band is taxed at that band's rate.

What's new for 2026

14% lowest rate: 2026 is the first full year at 14% (down from 15%; 2025 had a blended 14.5% because the cut started mid-year). Everyone pays less on their first $58,523 of taxable income.
Indexation: all five thresholds rose 2.0% for 2026, so inflation alone doesn't push you into a higher bracket as quickly.
Basic personal amount: $16,452 for 2026 — the first $16,452 of income is effectively federal-tax-free. It phases down for incomes above $181,440 (minimum $14,829).

How it combines with Ontario

Federal and provincial taxes are calculated separately, then added. At $100,000 of Ontario taxable income, for example, the combined marginal rate is about 31.48% — 20.5% federal plus 9.15% Ontario plus the start of Ontario's surtax. See the Ontario brackets guide for the provincial side.

Key points

Five federal brackets, 14% to 33%, applied progressively.
The BPA credit ($16,452 × 14% ≈ $2,303) wipes out federal tax on the first dollars.
Figures are 2026 estimates for illustration. Your notice of assessment is official.

Worked example: federal tax on $60,000

Only the income inside each band is taxed at that band's rate. On $60,000 of 2026 taxable income:

Slice of income	Rate	Tax
First $58,523	14%	$8,193.22
Remaining $1,477	20.5%	$302.79
Gross federal tax		$8,496.01
Basic personal amount credit ($16,452 × 14%)		−$2,303.28
Net federal tax		≈ $6,193

The key insight: only $1,477 of the $60,000 faces the 20.5% rate. The often-quoted "second bracket" sounds scary, but at this income it adds about $303 to the bill — the 14% rate and the basic personal amount do the heavy lifting.

FAQ

Will a 3% raise push me into a higher bracket?

Maybe on a small slice — and only that slice. Brackets are indexed 2.0% for 2026, so a 3% raise slightly outpaces indexation: if your income was right at the $58,523 threshold, roughly 1% of your income could newly face the 20.5% rate. On $60,000 that is roughly $600 newly facing the higher rate — about $40 extra tax versus a fully indexed world. Bracket creep is real but small year to year.

Is the 20.5% rate applied to my whole income once I cross $58,523?

No — Canada taxes marginally. Crossing into the second bracket changes the rate only on dollars above $58,523. Earning $59,000 instead of $58,000 costs about $96.50 extra in federal tax, not thousands.

What is the basic personal amount actually worth?

For 2026 it is a $16,452 credit at the 14% lowest rate, worth about $2,303 off your federal tax bill. Everyone gets it, which is why the first dollars of income are effectively federal-tax-free.

Do I pay 33% tax if I earn over $258,482?

No. Only the income above $258,482 is taxed at 33%. Everything below is taxed at the lower bracket rates, which is why your average rate is always well below your top marginal rate.

Are these official CRA calculations?

No. This site is an educational resource. Use CRA tools, payroll tables and your own CRA account for official information.