Capital gains tax in Canada (2026): the rate didn’t change

What is capital gains tax in Canada?

Capital gains tax in Canada is ordinary income tax on half of your profit. You have a capital gain when you sell a capital property, such as shares, an ETF, a cottage or a rental, for more than it cost you. The taxable half goes on line 12700 of your return.

That is why there is no capital gains tax rate to look up. The CRA calls the fraction the inclusion rate: the share of your gain that counts as income. Once it is in your income, your marginal rate does the rest, and that depends on your province and everything else you earned that year.

There is also no short-term or long-term split. A share held for a week and a share held for a decade are taxed the same way.

Is the capital gains inclusion rate still 50%?

Yes. The capital gains inclusion rate is one-half, as it has been every year since 2001 in the CRA’s inclusion rate table. The increase to two-thirds that many Canadians remember never took effect.

The CRA’s 2026 capital gains guide is published with the tax-filing season, so its current guide covers 2025. Nothing announced since the cancellation changes the one-half rate for 2026.

How do you calculate a capital gain?

Your capital gain is the proceeds of disposition minus your adjusted cost base and your selling costs. The CRA uses three terms, and each one matters.

Say you bought a cottage for $300,000 and paid $5,000 in legal fees and transfer costs, so your adjusted cost base is $305,000. You sell for $420,000 and pay a $15,000 commission. Your gain is $100,000, and half of it, $50,000, is your taxable capital gain.

For shares and ETFs, the adjusted cost base is the average cost of all the identical units you hold, recalculated at each purchase. The CRA treats each reinvested distribution as a new purchase added to that average. Leave reinvestments out and your gain looks bigger than it is, so you pay more tax than you owe.

How much capital gains tax will I pay?

Multiply the taxable half of your gain by your marginal rate. Here is a $10,000 gain on shares bought for $20,000 and sold for $30,000, using the 2026 federal brackets.

Provincial tax comes on top. In Ontario at $85,000, the 9.15% provincial rate adds $457.50, so the combined tax on the gain is $1,482.50, or 14.825% of it. Ontario’s surtax and Health Premium aren’t included.

A large gain can push you across a bracket line. Take the $100,000 cottage gain with $50,000 of other income. The $50,000 taxable half lifts taxable income to $100,000. The first $8,523 of it is taxed at 14% ($1,193.22) and the remaining $41,477 at 20.5% ($8,502.79). Federal tax on the gain is about $9,696, or about 9.7% of the $100,000.

When do you pay no capital gains tax?

Three situations take capital gains tax off the table: your principal residence, the lifetime exemption and registered accounts.

The principal residence exemption only covers the part of a property you lived in. If you rented out a basement suite, the gain on the rental part is taxable. A home that switched between rental and personal use is worth professional advice.

Registered accounts are the simplest shelter for most investors. Gains inside a TFSA are never taxed, even when you withdraw, and the 2026 limit is $7,000. Gains inside an RRSP aren’t taxed as gains, but withdrawals are taxed as income. An FHSA gives you a deduction going in, and qualifying withdrawals for a first home, investment income included, are non-taxable.

What if you sold at a loss?

Half of a capital loss is an allowable capital loss, and it can only reduce taxable capital gains, not your other income. If your losses are bigger than your gains, the leftover becomes a net capital loss that you can carry back three years or forward indefinitely.

Say you lose $6,000 on a stock in 2026 and sell nothing else at a gain. Your net capital loss is $3,000. You can apply it to taxable capital gains you reported in 2023, 2024 or 2025 using Form T1A, and get some tax back, or keep it for any future year. Unused balances appear on your notice of assessment.

The superficial loss rule stops you from selling at a loss for the tax break and buying straight back. If you, or someone affiliated with you such as your spouse or common-law partner, buy the same or identical property in the 30 calendar days before or after the sale, the loss is denied.

You have to report a gain on personal-use property, but the CRA generally doesn’t allow you to claim a loss on it.

What would the cancelled increase have cost?

For most people, nothing. The cancelled proposal applied two-thirds only to the part of an individual’s gains above $250,000 in a year. The figures below are arithmetic on a proposal that never took effect, not a rate anyone pays.