Here’s what you need ahead of the 2026 tax season.

Changes to your 2026 tax returns are coming in the new year that will ultimately affect your bottom line.

New federal tax brackets adjusted for inflation have been revealed by the Canada Revenue Agency (CRA), with the inflation rate used to index tax brackets now set at two per cent.

Every year, personal income tax and benefit amounts are indexed to inflation using the Consumer Price Index data. Over the last few years, the inflation rate decreased from 6.3 per cent in 2023, to 4.7 per cent in 2024 to 2.7 per cent in 2025.

Increases to tax bracket thresholds and non-refundable credits will take effect on Jan. 1, while changes to income-tested benefits such as goods and services tax credit, the Canada Child Benefit and Child Disability Benefit will take effect on July 1.

Here’s everything you need to know about how you will be taxed in the new year:

Changes for the lowest tax bracket
In May, the federal government announced a “middle-class tax cut” to reduce taxes for the lowest income tax bracket. For 2026 and subsequent tax years, the lowest federal tax bracket will be 14 per cent, a decrease from 14.5 in 2025.

Breakdown of tax brackets:
Tax rates for provinces and territories vary across Canada. Here’s the federal breakdown:

Income under $58,523 is taxed at 14 per cent
Income from $58,523 to $117,045 is taxed at 20.5 per cent
Income from $117,045 to $181,440 is taxed at 26 per cent
Income from $181,440 to $258,482 is taxed at 29 per cent
Income $258,482 and over is taxed at 33 per cent

The basic personal amount (BPA) — how much income you can earn that’s tax-free — has been raised by the government and is a non-refundable tax credit claimable by all taxpayers.

The federal BPA increased to $13,229 for 2020, $13,808 for 2021, $14,398 for 2022, $15,000 for 2023. The amount became indexed after 2023 and is set to increase to $16,452 in 2026.

Increases to child benefits
The Canada Child Benefit (CCB) — a tax-free monthly payment helping eligible families with the cost of raising their child under the age of 18 — is increasing. For those with children under six, it is increasing to $8,157. Last year, the base benefit was upped to $7,997 and back in 2023 it was at $7,437. For those raising children between the ages of six and 17, the CCB is also increasing from $6,748 in 2025 to $6,883.

The amount you receive under the CCB is based on the number of children you care for, their ages, and your family net income from last year’s tax return. In 2025, if your family net income for the previous year was less than $37,487, you would have received the maximum amount for each child. The adjusted family income at which amounts will be gradually reduced in 2026 is $38,237.

The Child Disability Benefit (CDB) is also seeing a slight uptick with a maximum benefit of $3,480 compared to last year’s $3,411 for families of eligible children.

Increases to Canada Pension Plan
For the fourth straight year, the Canada Pension Plan (CPP) employee and employer contribution rate remains at 5.95 per cent.

The maximum annual employee and employer contribution is about $4,231, up from $4,034, while for self-employed individuals it’s about $8,461, an increase from $8,068.

Employment Insurance Premiums changes
Slight changes to federal employment insurance premiums are coming. The rate for 2026 is 1.63 per cent, a slight drop from 1.64 per cent in 2025, except in Quebec where it’s 1.30 per cent (down from 1.31 per cent), with the maximum annual insurable earnings for both being $68,900.

For employees and employers, the maximum annual premium is about $1,123 and $1,572, respectively, while in Quebec it is about $896 and $1,254.

Other notable changes to watch for
For those with a Registered Retirement Savings Plan (RRSP), the contribution limit for 2026 is the lesser of $33,810 (an increase from last year’s $32,490) or 18 per cent of your earned income for the previous year.

Canadians’ annual tax-free savings account limit is staying the same at $7,000, unchanged since 2024, while the old age security repayment threshold is increasing to $95,323 in 2026 from $93,454 in 2025.

If your net income before adjustments exceeds that amount, you may have to repay part or all of your pension, according to the Income Tax Act.