What is the capital gains inclusion rate in Canada for 2026?

It is 50%. Half of your capital gain is added to your income and taxed at your marginal rate; the other half is tax-free. The proposed increase to 66.67% was deferred and then cancelled on 21 March 2025, so 50% applies for 2024, 2025 and beyond.

How is capital gains tax calculated?

There is no separate capital gains rate. Take your gain (proceeds minus cost base), subtract any capital losses, then include 50% of the result in your taxable income. That taxable half is taxed at your combined federal and provincial marginal rate — so your effective rate on the whole gain is roughly half your marginal rate.

Can capital losses reduce my tax?

Yes, but only against capital gains — not your salary. Losses are applied before the 50% inclusion. Unused losses can be carried back three years or forward indefinitely. Your principal residence is generally exempt from capital gains tax altogether.

Canada · 2026 tax year

Canada Capital Gains Tax Calculator

Canada has no separate capital gains rate. Half your gain is added to your income and taxed at your marginal rate — the other half is tax-free. See the tax on a sale, by province.

Your gain

Sale proceeds

Cost base What you paid, plus purchase & improvement costs

Capital gain$0

Province

Your other taxable income Sets the marginal rate the taxable half lands on

Capital losses

Capital losses to apply Current-year or carried-forward; offsets the gain before inclusion

Tax on your gain

—

— effective on the gain · — marginal

Capital gain$0

Net capital gain$0

Taxable (50% inclusion)$0

Tax on the taxable half$0

Total capital gains tax$0

The 50% inclusion saves you $0 versus this gain being taxed as ordinary income.

Net gain

Taxable half

Effective rate

You keep

How capital gains tax works in Canada

There's no special capital gains tax rate in Canada. Instead, when you sell an asset for more than you paid, the government includes half the gain in your taxable income — the 50% inclusion rate — and taxes that half at your normal marginal rate. The other half is entirely tax-free. So if your marginal rate is 43%, your effective rate on the whole gain is about 21.5%.

The inclusion rate that almost changed

The 2024 federal budget proposed raising the inclusion rate to 66.67% on gains over $250,000. After a deferral, the government cancelled the increase on 21 March 2025. The rate stays at 50% for 2024, 2025 and beyond. The Lifetime Capital Gains Exemption on qualified small-business shares and farm/fishing property was kept at the higher $1.25 million.

Losses and the principal residence

Capital losses can only offset capital gains — never your salary — and apply before the 50% inclusion. Unused losses carry back three years or forward forever. And your principal residence is generally exempt from capital gains tax entirely, which is why most Canadians never pay it on their home.

Frequently asked questions

Is my home taxed when I sell it?

Generally no. The principal residence exemption shelters the gain on the home you live in. It must be designated, and only one property per family per year qualifies, but for most people the family home is fully exempt. Second homes, cottages and rentals are not.

What counts as the cost base?

Your adjusted cost base is what you paid plus costs to acquire and improve the asset — legal fees, commissions, capital improvements. A higher cost base means a smaller gain, so keep records. For securities, reinvested distributions also adjust it.

Are stocks in my TFSA or RRSP taxed?

No. Gains inside a TFSA are completely tax-free, and gains inside an RRSP are tax-deferred until withdrawal (then taxed as ordinary income). The capital gains rules here apply to assets held in a regular, non-registered account.

Educational estimate — not tax advice. Canada 2026 tax year. The capital gains inclusion rate is 50% (the proposed 66.67% increase was cancelled on 21 March 2025). The taxable half is added to income and taxed at combined federal + provincial marginal rates (federal 14% / 20.5% / 26% / 29% / 33%; provincial/territorial brackets for all 10 provinces and 3 territories; Ontario surtax included; Quebec applies the 16.5% federal abatement and is approximate). Capital losses are applied before inclusion and only against gains. It excludes the Lifetime Capital Gains Exemption ($1.25M on qualified small-business/farm/fishing property), the principal residence exemption detail, the Canadian Entrepreneurs' Incentive, Alternative Minimum Tax, and reserves. Confirm with the CRA or an accountant.