GenzeeCanada's Lowest Federal Tax Rate Drops to 14% for 2026
If your pay stub looks slightly better this year, this is part of why: Canada's lowest federal personal income tax rate was cut from 15% to 14% partway through 2025, and 2026 is the first full year Canadians are taxed at that reduced rate on income up to roughly $58,523, according to reporting from CTV News and figures published on Canada.ca.
The new 2026 federal brackets
For 2026, the federal brackets are 14% up to $58,523, 20.5% up to $117,045, 26% up to $181,440, 29% up to $258,482, and 33% above that — with thresholds indexed upward by about 2% for inflation, per figures cited by KPMG Canada and Wealthsimple.
Why it matters
Because Canada's system is progressive, the lower rate on the first bracket benefits every taxpayer, not just low earners — everyone's first roughly $58,500 of taxable income is taxed one point lighter than in 2024. Provincial tax still applies on top of the federal rate. Want to see what this means for your own paycheque? Our Canada Income Tax Calculator breaks down federal and provincial tax together so you can check your real take-home pay.
Note: This is a plain-language summary, not tax advice. Rates and rules can change; verify your specific case with the relevant tax authority or a qualified adviser. See our editorial policy for how we source and date figures.