Capital Gains Tax Canada 2026: Inclusion Rate Explained
The inclusion rate is 50% for everyone in 2026. Here's how capital gains are taxed, and what happened to the proposed 66.67% rate you may have read about.
By Ahmad Jamal · Published November 22, 2025 · 6 min read
When you sell an investment for more than you paid for it, that profit is a capital gain, and only part of it is actually taxable. For 2026, that part (the inclusion rate) is 50% for everyone, the same as it's been for years, despite what you may have read about a hike that never happened.
Quick Answer
Capital Gains Inclusion Rate 2026
The rate is the same no matter how big the gain or who realizes it: 50% in 2026, for individuals and for corporations and trusts.
Inclusion Rate by Taxpayer Type
Half of every gain is added to your income and taxed at your marginal rate. There's no higher rate for larger gains.
What Happened to the Proposed 66.67% Rate?
You may have read that the inclusion rate was going up to 66.67%. Here's the short version: in June 2024, the federal government proposed raising the inclusion rate to 66.67% on capital gains above $250,000 per year for individuals (and on all gains for corporations and trusts). The change was never passed into law. In early 2025 the start date was pushed back, and on March 21, 2025 the government cancelled the proposal entirely.
The 66.67% rate never took effect. The inclusion rate stays at 50% for 2026. One related change did survive: the Lifetime Capital Gains Exemption was raised and is now indexed to inflation (about $1.27 million for 2026), which mainly matters if you're selling qualified small business shares or farm and fishing property.
How Capital Gains Tax Works
Capital gains don't get taxed at a flat rate. Only a portion, the inclusion rate, gets added to your income, and that portion is taxed at your regular marginal rate like anything else you earn.
Example: $100,000 Capital Gain (Individual)
- Inclusion rate: 50%
- Taxable amount: $100,000 × 50% = $50,000
- At a 30% marginal rate: $50,000 × 30% = $15,000 tax
- Effective tax rate on the gain: 15%
Example: $400,000 Capital Gain (Individual)
- Inclusion rate: 50% (the full gain, no threshold)
- Taxable amount: $400,000 × 50% = $200,000
- At a 40% marginal rate: $200,000 × 40% = $80,000 tax
- Effective tax rate on the gain: 20%
Who's Affected?
Capital gains tax only applies to non-registered investments, so most Canadians investing inside a TFSA or RRSP never deal with it at all. You're most likely to face a real capital gains bill 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
Two ways to pay zero capital gains tax
Strategies to Minimize Capital Gains Tax
- Use registered accounts. TFSA and RRSP gains aren't subject to capital gains tax at all.
- Spread gains across years. Realizing large gains gradually can keep you in a lower marginal tax bracket.
- Harvest losses. Offset gains with losses from other investments.
- Donate securities. Gifting appreciated securities straight to a charity eliminates the capital gains entirely.
The Bottom Line
The inclusion rate is 50% in 2026, the same as it's always been, and the proposed 66.67% increase was cancelled before it ever took effect. Half of every capital gain gets added to your income and taxed at your marginal rate, nothing more complicated than that. If you want to lower the bill, registered accounts, loss harvesting, and spreading out large sales across tax years are still your best levers.
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Disclaimer
This article is for informational and educational purposes only and does not constitute financial, tax, investment, or legal advice. Contribution limits, tax rates, benefit amounts, and government program rules are approximate and change over time. Always verify current figures directly with the Canada Revenue Agency (CRA) and consult a qualified financial advisor, accountant, or tax professional before making decisions about your money. Waypoint Budget does not provide professional financial advice, and using our content does not create an advisory relationship.