Capital Gains Tax in Canada (2026): 50% Inclusion, Calculation, and Planning
- Taxable capital gain = one-half of (proceeds minus adjusted cost base minus selling costs), under the inclusion rate in force for 2026.
- The two-thirds rate, and the $250,000 individual threshold that went with it, were a proposal. The Prime Minister cancelled that proposal on March 21, 2025.
- CRA pages written at the January 2025 deferral still describe a January 1, 2026 effective date. That text describes a proposal that was later dropped. The enacted rate CRA was already administering is one-half.
- A capital loss offsets capital gains, not salary. The superficial-loss rule can deny the loss if you rebuy too soon.
- The lifetime capital gains exemption is a different rule, for qualifying small-business shares and farm or fishing property, not for a typical ETF.
What is the capital gains inclusion rate in 2026?
The inclusion rate is the fraction of a capital gain that enters your income. For 2026 that fraction is one-half, for individuals, corporations, and trusts, unless a specific exemption sets it to zero. There is no annual $250,000 band at a higher rate, because that band was part of the proposal that did not become law.
The sequence, from the official notices, is short. Budget 2024 proposed raising the rate from one-half to two-thirds, above $250,000 of gains a year for individuals and on all gains of corporations and most trusts, from June 25, 2024. On January 31, 2025 the Department of Finance deferred that date to January 1, 2026, and the CRA said it would keep administering the enacted one-half rate for gains before the new date. On March 21, 2025 the Prime Minister announced the government would cancel the increase. The increase was not enacted. Some CRA "what's new" pages still repeat the January deferral language. Read them as history of a proposal, not as the 2026 rate.
| What happened | Rate that applies | Source |
|---|---|---|
| Enacted rule, including gains realized in 2026 | One-half | CRA administered the enacted one-half rate while the proposal was outstanding |
| Budget 2024 proposal, deferred on January 31, 2025 to January 1, 2026 | Not in force. Would have been two-thirds above $250,000 for individuals, and on all gains of corporations and most trusts | Department of Finance, January 31, 2025 |
| March 21, 2025 announcement | Proposal cancelled. One-half remains | Prime Minister of Canada |
| Gift of certain listed securities to a qualified donee | Inclusion rate of zero on that gift | CRA, capital gains on gifts of certain capital property |
Table as of September 2026. The lifetime exemption increase to $1.25 million was kept. That is a separate limit, covered below. The account-location version of this rule is tax-efficient investing.
How do you calculate the tax?
A capital gain is not a tax rate. It is an amount that then rides your ordinary brackets. Three numbers:
- Proceeds of disposition. What you received, generally the selling price.
- Adjusted cost base. What you paid, plus costs to buy, adjusted for returns of capital and reinvested distributions. A T5008 is an input, not the books. The habit is in the record-keeping guide.
- Outlays and expenses. Commission to sell, for example.
Gain = proceeds − adjusted cost base − outlays. Taxable capital gain = one-half of that gain. That taxable half is added to your other income and taxed at your marginal rate. The other half is not taxed. You report it on Schedule 3.
Proceeds $58,000. Adjusted cost base $40,000. Commission $50. Capital gain = $58,000 − $40,000 − $50 = $17,950. Taxable capital gain = one-half × $17,950 = $8,975. The other $8,975 is not included. If the included half is taxed at a combined marginal rate of 29.65 percent — the federal 20.5 percent bracket plus Ontario's 9.15 percent bracket, which is where the 2026 calculator lands on about $80,000 of ordinary taxable income — the tax on this gain is about $8,975 × 0.2965 = $2,661. That rate is an illustration of those two brackets, not her whole return. Provincial surtax, credits, and other income move it.
The same $17,950 at a two-thirds inclusion would have put $11,967 into income. That is the proposal that was cancelled. Do not file 2026 on that fraction.
What if you have a loss?
An allowable capital loss is one-half of a capital loss, matching the inclusion rate. It offsets taxable capital gains. It does not offset salary, interest, or business income. Unused net capital losses carry back three years on Form T1A and forward indefinitely, still against capital gains. The year-end sequence is the tax-loss harvesting calendar.
The superficial-loss rule denies the loss when you, or an affiliated person, acquire the same property in the window that runs 30 days before the sale and 30 days after, and still hold it at the end of that window. A repurchase inside your TFSA or RRSP is the version that deletes the loss permanently, because those accounts have no personal capital gain to attach the denied loss to.
Which gains are not taxed at one-half?
- Your principal residence, when the exemption applies. The designation rules, and the trap when a property was also a rental, sit with the primary residence versus rental comparison. This page does not replace Form T2091.
- Gains inside a TFSA, RRSP, RRIF, or FHSA. There is no personal capital gain on a sale inside those accounts. The RRSP version comes back later as ordinary income when you withdraw. The account comparison is RRSP versus TFSA versus FHSA.
- Listed securities donated in kind to a registered charity or other qualified donee. The inclusion rate on that gift can be zero, and you still get a donation receipt for fair market value. The credit math is the donation tax credit.
- Qualifying small-business shares and qualified farm or fishing property, up to the lifetime capital gains exemption. CRA describes the limit as $1.25 million for dispositions after June 24, 2024, with indexation resuming in 2026. The federal indexing factor CRA published for January 1, 2026 is 2.0 percent. Applied to $1.25 million, that arithmetic is $1,275,000. Confirm the indexed dollar on CRA's indexation chart before you rely on it. The exemption is not a credit on a cottage or a public stock.
- Business income, not capital. If you are trading rather than investing, the profit can be fully included. That distinction is the whole of the crypto tax guide, and it applies to shares too.
Regular tax includes half the gain. The alternative minimum tax, since 2024, includes the full gain and taxes the excess over a basic exemption at 20.5 percent. A gain that looks lightly taxed under the one-half rate can still produce minimum tax. Read the AMT guide before a large sale or a large in-kind donation.
Does the rate differ inside a corporation?
The inclusion rate is one-half there too, now that the two-thirds proposal is cancelled. The taxable half is investment income inside a Canadian-controlled private corporation, taxed up front, with a refundable piece when the company pays a taxable dividend. The untaxed half can be added to the capital dividend account and paid out as a capital dividend, which requires an election. That machinery is corporate versus personal investing. It is accountant work.
Frequently asked questions
Is the capital gains inclusion rate 50 percent or 66.67 percent in 2026?
One-half. The two-thirds proposal from Budget 2024 was deferred to January 1, 2026 and then cancelled on March 21, 2025. It was not enacted. File Schedule 3 at one-half unless a specific rule, such as a gift of listed securities, sets the inclusion to zero.
Do I pay capital gains tax when my ETF goes up but I do not sell?
Not on the unrealized rise in units you still hold. You can still receive a taxable capital gain the fund distributes, including a gain it realized inside the fund and reinvested. That distribution is on the T3, and it changes your adjusted cost base. An unrealized personal gain is not a tax bill yet.
Can I use a capital loss against my salary?
No. Allowable capital losses offset taxable capital gains. They carry back three years and forward indefinitely against gains. They do not reduce employment income. That is a different rule from the United States.
Does my spouse's TFSA purchase after I sell ruin the loss?
It can. The superficial-loss rule looks at you and affiliated persons, which includes a spouse, and it looks inside registered accounts. If the same property is acquired in that window and still held at the end of it, the loss is denied. Pick a substitute that is not the identical property.
Is the $1.25 million lifetime exemption available on my rental or my stocks?
Not on a typical rental, cottage, or publicly traded stock. The lifetime capital gains exemption CRA describes applies to qualified small business corporation shares and qualified farm or fishing property, and the tests are strict. The $1.25 million figure is the limit CRA states for dispositions after June 24, 2024. Indexation resumes in 2026. Confirm the indexed amount before you sell.
Where do I report a gain?
Schedule 3, then the taxable half on your return. Keep the confirmation slip, the adjusted cost base worksheet, and the T5008. If the gain is large enough that minimum tax is plausible, also complete Form T691. The filing software roundup is best tax software, and it does not replace the schedule.
Sources
- Prime Minister of Canada: cancellation of the proposed capital gains increase, March 21, 2025
- Department of Finance: deferral announcement, January 31, 2025
- CRA: administration of the proposed changes, and the enacted one-half rate
- CRA: inclusion rate of zero on gifts of certain capital property
- CRA: how to calculate a capital gain or loss
The inclusion rate is the easy half. The return is the rest.
Brackets, the adjusted cost base, and the credits around a gain are the filing problem. The 2026 tax guide is that companion, $49 CAD.
Get the 2026 Tax Guide — $49 CAD
