Canadian Corporate Tax Rates in 2026: Federal and Provincial Breakdown
Canada's corporate tax system has two layers: federal rates set by the Canada Revenue Agency and provincial/territorial rates set by each province. The combined rate is what your corporation actually pays.
This reference guide sets out the 2026 rates for both large corporations (general rate) and small businesses (small business deduction rate) across all provinces and territories.
Federal Corporate Tax Rates (2026)
The federal corporate tax rate has two tiers based on income level and corporation type:
| Income Type | Rate | Notes |
|---|---|---|
| Small business income (CCPCs, first $500K) | 9% | Small business deduction (SBD) applies |
| Active business income above $500K | 15% | General rate |
| Manufacturing and processing | 15% | No small business deduction |
| Investment income | 38.67% | Non-eligible dividends, with gross-up |
Small business deduction (SBD): For Canadian-controlled private corporations (CCPCs) earning active business income up to the $500,000 threshold, the federal rate is reduced from 15% to 9% via the small business deduction. This is one of the most significant tax advantages available to Canadian small businesses.
SBD phase-out: For CCPCs with taxable capital over $10M, the SBD begins to phase out and is fully eliminated at $50M in taxable capital.
Small Business Deduction Rates (CCPCs, Taxable Income ≤ $500K) — 2026
Combined federal (9%) + provincial SBD rate for the first $500,000 of active business income.
| Province/Territory | Federal | Provincial | Combined |
|---|---|---|---|
| Alberta | 9% | 8% | 17% |
| British Columbia | 9% | 2% | 11% |
| Manitoba | 9% | 0% | 9% |
| New Brunswick | 9% | 2.5% | 11.5% |
| Newfoundland and Labrador | 9% | 2.5% | 11.5% |
| Northwest Territories | 9% | 2% | 11% |
| Nova Scotia | 9% | 1.5% | 10.5% |
| Nunavut | 9% | 3% | 12% |
| Ontario | 9% | 3.2% | 12.2% |
| Prince Edward Island | 9% | 1% | 10% |
| Quebec | 9% | ~3.2% ⚠️ | ~12.2% ⚠️ |
| Saskatchewan | 9% | 1% | 10% |
| Yukon | 9% | 0% | 9% |
⚠️ Quebec SBD rate note: Quebec does not participate in the CRA's harmonized tax collection agreement and is excluded from the CRA's provincial rate table. The ~3.2% provincial SBD rate is an estimate based on the federal SBD structure. Confirm the exact figure via Revenu Québec before relying on this rate for planning purposes.
General Corporate Rates (Large Corporations, Taxable Income > $500K) — 2026
Federal (15%) + provincial general rate for corporations above the SBD threshold.
| Province/Territory | Federal | Provincial | Combined |
|---|---|---|---|
| Alberta | 15% | 14% | 29% |
| British Columbia | 15% | 12% | 27% |
| Manitoba | 15% | 12% | 27% |
| New Brunswick | 15% | 14% | 29% |
| Newfoundland and Labrador | 15% | 15% | 30% |
| Northwest Territories | — | — | 26.5% |
| Nova Scotia | 15% | 14% | 29% |
| Nunavut | — | — | 27% |
| Ontario | 15% | 11.5% | 26.5% |
| Prince Edward Island | 15% | 15% | 30% |
| Quebec | 15% | 11.5% | 26.5% |
| Saskatchewan | 15% | 12% | 27% |
| Yukon | — | — | 27% |
What the Combined Rate Means in Practice
Example 1 — Small business in Ontario (CCPC, $400,000 income): - Federal tax (9% on $400K): $36,000 - Ontario provincial tax (3.2% on $400K): $12,800 - Total: $48,800 | Effective rate: 12.2%
Example 2 — Small business in Alberta (CCPC, $400,000 income): - Federal tax (9% on $400K): $36,000 - Alberta provincial tax (8% on $400K): $32,000 - Total: $68,000 | Effective rate: 17%
Example 3 — Large corporation in Ontario (above $500K, $2M income): - Federal tax (15% on $2M): $300,000 - Ontario provincial tax (11.5% on $2M): $230,000 - Total: $530,000 | Effective rate: 26.5%
The Small Business Deduction: Why It Matters
The small business deduction reduces the federal rate from 15% to 9% on the first $500,000 of active business income for CCPCs. Key eligibility rules:
- You must be a Canadian-controlled private corporation (CCPC)
- The income must be active business income (not investment income)
- Income must be from a Canadian source
- The $500K limit is shared across affiliated corporations
Associated corporations: If your corporation is associated with others (e.g., you own multiple companies), the $500K SBD limit is shared among them.
Provincial Highlights
Lowest SBD combined rates (best for small businesses): Manitoba (9%), Yukon (9%), PEI (10%), Saskatchewan (10%), BC (11%)
Highest SBD combined rates: Quebec (~12.2% ⚠️), Nunavut (12%), Ontario (12.2%), Nova Scotia (10.5%)
Territories: NWT, Nunavut, and Yukon do not have separate corporate income tax acts. Rates shown are combined federal-territorial per the CRA table. No separate territorial small business deduction applies.
Annual Updates
Corporate tax rates change annually — sometimes mid-year. This guide should be updated each January with confirmed rates for the year.
Draft prepared by CMO | 2026-04-09 Rates verified by CTO via LXV-576 (2026-04-09) Quebec SBD rate flagged ⚠️ — confirm via Revenu Québec before publish Target: publish Tue Apr 28 (Week 4)
