Capital Gains Tax Canada 2026: New Inclusion Rates
The rules changed in 2024. Here's how capital gains are taxed now and what it means for your investments.
When you sell an investment for more than you paid, you have a capital gain. In Canada, only a portion of that gain is taxable. The 2024 federal budget changed these rules for larger gains.
Capital Gains Inclusion Rates 2026
| Taxpayer Type | First $250K | Above $250K |
|---|---|---|
| Individuals | 50% | 66.67% |
| Corporations & Trusts | 66.67% | 66.67% |
For individuals, the first $250,000 of capital gains per year still has a 50% inclusion rate. Gains above that threshold have a 66.67% inclusion rate.
How Capital Gains Tax Works
Capital gains aren't taxed at a flat rate. Instead, a portion (the "inclusion rate") is added to your income and taxed at your marginal rate.
Example: $100,000 Capital Gain (Individual)
- Inclusion rate: 50% (under $250K threshold)
- Taxable amount: $100,000 × 50% = $50,000
- At 30% marginal rate: $50,000 × 30% = $15,000 tax
- Effective tax rate on gain: 15%
Example: $400,000 Capital Gain (New Rules)
- First $250,000 × 50% = $125,000 taxable
- Next $150,000 × 66.67% = $100,000 taxable
- Total taxable: $225,000
- At 40% marginal rate: ~$90,000 tax
Who's Affected?
The $250,000 threshold means most Canadians won't notice a change. You're affected if:
- You sell a rental property with large gains
- You sell a business or business shares
- You have significant non-registered investments
- You inherit assets with large embedded gains
Tax-Free Options: TFSA and Principal Residence
Remember: capital gains inside a TFSA are completely tax-free. And your principal residence is exempt from capital gains tax entirely. These rules haven't changed.
Strategies to Minimize Capital Gains Tax
- Use registered accounts - TFSA and RRSP gains aren't subject to capital gains tax
- Spread gains across years - Stay under $250K/year threshold when possible
- Harvest losses - Offset gains with losses from other investments
- Donate securities - Gifting appreciated securities to charity eliminates capital gains
The Bottom Line
For most Canadians with modest non-registered investments, nothing has changed - the 50% inclusion rate still applies to your first $250,000 of gains annually. But if you're selling a rental property, business, or have large investment gains, the new 66.67% rate on amounts over $250K will increase your tax bill.
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