The Canada Revenue Agency has released updated tax figures for 2026. These annual changes affect how much tax you pay and how much you can put into registered accounts. They also determine federal benefit amounts and CPP & EI deductions from your paycheque next year. The 2026 updates include a two per cent inflation adjustment that applies to most tax brackets and credit amounts. This guide explains what changes on January 1 and July 1. It covers what these changes mean for workers and retirees and investors and families. It also shows how to prepare before the new year starts.
Inflation Adjustment for 2026
Every year the CRA adjusts tax brackets and credit amounts to keep up with inflation. For 2026 the indexation factor is two per cent. This rate is lower than last year because inflation has slowed down.
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– The inflation adjustment affects two categories at different times.
– Tax brackets and most non-refundable credits will change on January 1, 2026.
– Benefits like the GST/HST credit and the Canada Child Benefit will change on July 1 2026 to match the program year schedule.
Updated Federal Tax Brackets for 2026
– 15 per cent on income up to $58,523
– 20.5 per cent on income from $58,523 to $117,045
– 26 per cent on income from $117,045 to $181,440
– 29 per cent on income from $181,440 to $258,482
– 33 per cent on income above $258,482
Higher Basic Personal Amount for 2026
The basic personal amount will reach $16452 in 2026. This represents the income threshold below which individuals pay no federal tax. The BPA generates tax savings by applying the lowest federal tax rate of 14 percent in 2026. This calculation results in a federal tax reduction of $2,303 for eligible taxpayers who qualify for the full amount. Higher earners receive a reduced BPA. The enhanced portion starts decreasing once income exceeds $181,440 and disappears entirely at $258,482. Taxpayers in the highest income bracket only receive the standard indexed BPA of $14,829.
Canada Pension Plan Contribution Changes
– CPP rate: 5.95 per cent each for employee and employer
– First earnings ceiling (YMPE): $74,600
– Maximum CPP contribution: $4,230.45 each for employer and employee
– Self-employed rate: 11.9 per cent, maximum $8,460.90
TFSA Contribution Limit Holds Steady
The Tax-Free Savings Account limit stays at $7,000 for 2026. When adjusted for inflation the amount came to $7185 but TFSA limits only go up in $500 steps. This means the ceiling will not change for another year. People who have been eligible since the program started in 2009 will have total contribution room of $102,500 in 2026.
RRSP Contribution Room for 2026
The RRSP contribution limit will increase to $33810 for 2026 from the previous amount of $32,490. Your individual contribution limit stays at 18 percent of your earned income from 2025 up to this new maximum amount plus any unused contribution room you have from earlier years.
Old Age Security Repayment Threshold
The OAS clawback threshold increases to $95323 for 2026. Seniors who have net income above this amount will experience a reduction in part or all of their OAS benefits.
Prescribed Interest Rates for 2026
The prescribed rate for the first quarter of 2026 stays at three per cent. This rate covers various tax situations such as employee loans and specific family loans for income splitting purposes. The CRA applies different rates based on whether you owe them money or they owe you money: CRA refund interest rate stands at five per cent CRA arrears interest rate stands at seven per cent
Preparing for 2026
– Update payroll estimates for CPP and EI.
– Check your RRSP contribution room for early planning.
– Review retirement income if you expect to approach the OAS threshold.
– Confirm whether the CPP2 changes affect your 2026 income.
– Estimate tax payable using the new bracket thresholds.
