Canada Corporate Tax Rates 2026
Complete guide to federal and provincial corporate tax rates in Canada. Compare CCPC small business rates, general corporate rates, and investment income rates across all provinces and territories.
Federal Corporate Tax Rates 2026
No Small Business Deduction
General corporations do not qualify for the reduced 9% rate on small business income.
Understanding Federal Rates
The federal corporate tax rate is the base rate applied across all of Canada. Provincial and territorial governments add their own rates on top of the federal rate, resulting in a combined corporate tax rate that varies by jurisdiction.
Key Point: CCPCs benefit significantly from the small business deduction, paying only 9% federal tax instead of 15% on the first $500,000 of active business income. This 6% difference can result in substantial tax savings for eligible corporations.
Provincial & Territorial Corporate Tax Rates 2026
Compare combined federal and provincial corporate tax rates across all Canadian jurisdictions. Rates shown include both federal and provincial components.
| Province/Territory | Small Business Combined Rate | General Corporate Combined Rate | SBD Limit |
|---|---|---|---|
Manitoba | 9.0%(9% + 0%) | 27.0%(15% + 12%) | $500K |
Yukon | 9.0%(9% + 0%) | 27.0%(15% + 12%) | $500K |
Prince Edward Island | 10.0%(9% + 1%) | 30.0%(15% + 15%) | $600K |
Saskatchewan | 10.0%(9% + 1%) | 27.0%(15% + 12%) | $600K |
Nova Scotia | 10.5%(9% + 1.5%) | 29.0%(15% + 14%) | $700K |
Alberta | 11.0%(9% + 2%) | 23.0%(15% + 8%) | $500K |
British Columbia | 11.0%(9% + 2%) | 27.0%(15% + 12%) | $500K |
Newfoundland and Labrador | 11.0%(9% + 2%) | 30.0%(15% + 15%) | $500K |
Northwest Territories | 11.0%(9% + 2%) | 26.5%(15% + 11.5%) | $500K |
Ontario | 11.2%(9% + 2.2%) | 26.5%(15% + 11.5%) | $500K |
Quebec | 11.2%(9% + 2.2%) | 26.5%(15% + 11.5%) | $500K |
New Brunswick | 11.5%(9% + 2.5%) | 29.0%(15% + 14%) | $500K |
Nunavut | 12.0%(9% + 3%) | 27.0%(15% + 12%) | $500K |
Ontario's 2.2% lower rate applies from July 1, 2026. Quebec's 2.2% minimum tax rate applies to taxation years beginning after April 29, 2026. If a rate changes during a tax year, the rate may need to be prorated.
CCPC vs General Corporation: Tax Rate Comparison
- • Enhanced capital gains exemption
- • Refundable dividend tax on hand (RDTOH)
- • Tax deferral opportunities
- • Public corporations
- • Foreign-controlled corporations
- • Corporations over $15M taxable capital
- • Non-resident controlled entities
Small Business Deduction (SBD) Limits by Province
Standard Limit: $500,000
Most Canadian provinces and territories follow the federal small business deduction limit of $500,000 annually. This is the maximum amount of active business income that qualifies for the preferential small business tax rate.
Higher Provincial Limits
Nova Scotia, Prince Edward Island, and Saskatchewan have higher provincial small business limits, allowing eligible CCPCs to apply their lower provincial rates to more active business income.
• Nova Scotia: $700,000 limit, 10.5% combined small-business rate
• Prince Edward Island: $600,000 limit, 10% combined small-business rate
• Saskatchewan: $600,000 limit, 10% combined small-business rate
How the Small Business Deduction Works
Investment Income Tax Rates for CCPCs
Higher Rates on Investment Income
CCPCs face significantly higher tax rates on investment income to prevent tax deferral advantages over personal investment. The federal rate alone is 38.67%, plus provincial rates.
- Interest Income: From bonds, GICs, savings accounts
- Dividend Income: From taxable Canadian corporations and foreign dividends
- Rental Income: Unless it qualifies as active business income
- Capital Gains: 50% taxable portion (inclusion rate)
- Royalty Income: From intellectual property or natural resources
The high tax includes a refundable portion (30.67% federal)that is refunded when taxable dividends are paid to shareholders. This \"Refundable Dividend Tax on Hand\" (RDTOH) system helps integrate corporate and personal taxes.
Tax Planning Considerations
Focus on generating active business income rather than passive investment income within your CCPC to benefit from lower tax rates (9-15% vs 46-54%).
Consider holding long-term investments personally or in a holding company structure rather than in your active business CCPC to optimize tax efficiency.
Time dividend payments strategically to trigger RDTOH refunds and manage the integration of corporate and personal taxes effectively.
While TOSI rules limit income splitting, proper planning with eligible family members can still provide tax benefits. Consult a tax professional.
Detailed Rates by Province & Territory
Frequently Asked Questions About Corporate Tax Rates
For 2026, Canadian corporate tax rates consist of federal and provincial components. CCPCs (Canadian-Controlled Private Corporations) pay 9% federal tax on small business income up to the applicable business limit, plus provincial rates ranging from 0% to 3%. General corporate income is taxed at 15% federally plus 8% to 15% provincially, depending on the province. Combined rates range from 9% to 30%.
The small business tax rate in Canada for CCPCs is 9% federally on active business income up to the applicable business limit. Provincial rates vary significantly: Manitoba and Yukon charge 0%, while other provinces and territories charge between 1% and 3%. Combined federal and provincial rates range from 9% to 12%.
For small business income (CCPC with small business deduction), Manitoba and Yukon have the lowest combined rates at 9% (0% provincial + 9% federal). For general corporate income, Alberta has one of the lowest combined rates at 23% (8% provincial + 15% federal). The choice depends on whether your corporation qualifies as a CCPC and your income level.
A CCPC (Canadian-Controlled Private Corporation) is a private corporation controlled by Canadian residents that qualifies for preferential tax treatment. CCPCs benefit from the small business deduction, paying only 9% federal tax (vs 15%) on eligible active business income up to the applicable business limit. They also have access to enhanced capital gains exemptions and the RDTOH system for investment income. General corporations pay flat rates on all income with no small business deduction.
CCPCs pay significantly higher rates on investment income: 38.67% federal plus provincial rates (typically 46-54% combined). This high rate includes a refundable portion (30.67% federal) through the RDTOH system that's refunded when dividends are paid. Capital gains are 50% taxable, with the taxable portion subject to these same investment income rates. General corporations pay their standard corporate rate (15% federal + provincial) on investment income.
The small business deduction (SBD) limit is $500,000 federally for most provinces and territories. Nova Scotia has a $700,000 provincial limit, while Prince Edward Island and Saskatchewan have $600,000 provincial limits. The limit can be reduced if the corporation has significant investment income (passive income over $50,000) or taxable capital over $10 million. Associated corporations must share the limit.
Ontario charges 2.2% on small business income (CCPC) effective July 1, 2026, and 11.5% on general corporate income. Combined with federal rates, Ontario CCPCs pay 11.2% on small business income up to $500,000 and 26.5% on general income.
No, different rates apply to different income types for CCPCs. Active business income qualifies for small business rates if under the $500,000 threshold. Investment income (interest, dividends, rental income not related to active business) faces much higher rates (46-54%). Capital gains are 50% taxable at investment income rates. General corporations pay their flat rate on all income types without these distinctions.
Disclaimer: Tax rates are accurate as of substantively enacted legislation as of 2026. This information is for general guidance only and should not be considered tax advice.
Always consult with a qualified tax professional or accountant for advice specific to your situation. Tax laws and rates can change, and individual circumstances may affect your tax obligations.
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