Staying on top of tax changes is a challenge for any business owner. With new rules and proposals coming out of Ottawa, it's crucial to understand how they might affect your company's bottom line. The year 2026 is shaping up to be a significant one, with some key changes on the horizon that could impact everything from your capital gains to your overall tax rate. At Nunniyer Business, we’re here to help you stay ahead of the curve. Let's break down some of the most important tax changes proposed for 2026 and what they could mean for you.
1. The Capital Gains Inclusion Rate Increase
This is one of the most talked-about changes. As of January 1, 2026, the proposed capital gains inclusion rate is set to increase.
For Individuals: The inclusion rate will increase from 50% to 66.67% on all capital gains realized above $250,000 annually. This means you will pay tax on a larger portion of your gains from the sale of investments or property above this threshold.
For Corporations: For most corporations, the inclusion rate will increase to 66.67% on all capital gains, with no lower threshold.
If you are planning to sell business assets or investments, this change could have a major impact. We can help you strategically plan for these changes to minimize your tax liability.
2. The Lifetime Capital Gains Exemption (LCGE) and New Incentives
It’s not all about higher taxes. The government has also introduced some welcome measures to support entrepreneurs.
Increased LCGE: The Lifetime Capital Gains Exemption on the sale of qualified small business corporation shares and qualified farming or fishing property has been increased to $1.25 million. This is a significant bump from previous years and offers a great opportunity for those planning to sell their business.
New Canadian Entrepreneurs’ Incentive (CEI): A new incentive is set to take effect starting in 2025 and will gradually reduce the inclusion rate to 33.33% on a lifetime maximum of $2 million in eligible capital gains. This is a powerful new tool to encourage entrepreneurship.
These changes can be complex, and understanding how they interact is key. It’s crucial to work with an advisor to ensure you are taking full advantage of these exemptions and incentives.
3. Changes to the Lowest Federal Income Tax Rate
There’s also good news for many Canadian taxpayers. The lowest federal personal income tax rate is proposed to be reduced from 15% to 14% for 2026 and subsequent years. This will provide some tax relief for individuals, including business owners who pay themselves a salary. While the savings may seem modest on their own, every dollar counts.
The tax landscape is always shifting, and staying informed is your best defense against unexpected costs. Proactive planning is not just a suggestion—it’s an absolute necessity.
If you have questions about how these upcoming changes will affect your business, investments, or personal finances, please feel free to reach out. The team at Nunniyer Business is here to provide the clarity and strategic advice you need to plan for a successful future.