CRA’s 2026 Tax Updates: What You Need to Know
- Paul Beck
- 3 days ago
- 2 min read
Every November, the Canada Revenue Agency (CRA) updates key tax figures for the upcoming year. These changes affect federal income tax brackets, non-refundable credits, contribution limits for registered plans like RRSPs and TFSAs, and even minimum withdrawal rates for RRIFs. The adjustments are largely driven by inflation, using the Consumer Price Index as a benchmark. For 2026, the indexation factor is 2.0%, which means thresholds and credits have nudged upward but, there’s more to the story this year.
What’s New for 2026?
Here are the updated federal tax brackets:
14% on the first $58,523 of taxable income
20.5% on income over $58,523 up to $117,045
26% on income over $117,045 up to $181,440
29% on income over $181,440 up to $258,482
33% on income over $258,482
The Basic Personal Amount, a credit that reduces the tax you pay on your income has also increased. For 2026:
Maximum BPA: $16,452 for incomes up to $181,440
Minimum BPA: $14,829 for incomes $258,482 or more
If your income is at or below $16,452, you won’t pay any federal tax.
A Twist from Last Year’s Budget
In July 2025, the federal government lowered the lowest income tax rate from 15% to 14%. This was a significant move aimed at easing the tax burden for millions of Canadians. However, the change had an unintended consequence: non-refundable tax credits such as the Basic Personal Amount (BPA) as they are calculated using the lowest tax rate. When that rate dropped, the value of these credits fell slightly, impacting taxpayers with large credits. To fix this, the 2025 federal budget introduced a “top-up” measure to ensure no one loses out. For 2026, the full correction is in place.
TFSA Contribution Limit for 2026
Annual Limit: $7,000
Lifetime Contribution Room: $109,000 (for those eligible since 2009)
The limit remains unchanged from 2024 and 2025, reflecting inflation-based indexation rounded to the nearest $500.
Key Rules:
Withdrawals restore contribution room the following calendar year, not immediately.
Over-contributions trigger a 1% monthly penalty on the excess amount.
RRSP Contribution Limit for 2026
Annual Dollar Limit: $33,810
You can contribute up to 18% of your previous year’s earned income, subject to this annual cap.
Comparison:
2025 limit: $32,490
2027 projected limit: $35,390
Why It Matters
These updates may seem small, but they can influence your tax planning. Higher thresholds mean more income taxed at lower rates, and a bigger BPA reduces your taxable income. Combine that with the lower 14% starting rate, and most Canadians will see modest savings.
Click here for more information on Federal Tax Rates. Personal income tax - Canada.ca
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