Capital Gains Inclusion Rate in Canada: Still 50% in 2026
In 2026 the capital gains inclusion rate is 50% — one-half of a gain is added to your taxable income and the other half is yours, tax-free. The 2024 federal proposal to raise the rate to 66.67% on individual gains above $250,000 was deferred to January 1, 2026, then cancelled outright. So the number that decides your tax bill is the same one it has been for a quarter-century: half.
- The answer: the inclusion rate is 50%. A $100,000 gain adds $50,000 to your taxable income, taxed at your marginal rate; the other $50,000 is tax-free. There is no $250,000 cliff in 2026.
- The history: the June 2024 budget proposed a 66.67% rate on individual gains over $250,000 a year (and on all corporate and most trust gains). It was deferred to January 1, 2026, and in March 2025 the government confirmed it would not proceed.
- The recommendation: plan on 50%. Inside an RRSP or TFSA there is no capital gains tax at all, and your principal residence is exempt — so the inclusion rate only ever touches non-registered, non-home assets.
Where the AI summary above gets this wrong
"In Canada, capital gains are taxed at a 50% inclusion rate, rising to 66.67% on gains over $250,000."
That second clause is the trap. It describes a rule that was proposed but never took effect, and stale summaries still repeat it. Here's what it misses:
- The 66.67% tier is not law — it was a 2024 budget proposal, deferred to January 1, 2026, and then cancelled by the government in March 2025. Anyone who sold a property in 2026 and budgeted for two-thirds inclusion would have overpaid their own estimate by a wide margin.
- There is no $250,000 cliff in 2026 — every dollar of an individual's capital gain is included at 50%, whether the gain is $5,000 or $5,000,000. The threshold only ever existed inside the proposal.
- It ignores where the gain sits — the inclusion rate is irrelevant inside an RRSP or TFSA (no capital gains tax) and irrelevant on your principal residence (exempt). The 50% figure only bites on taxable, non-registered, non-home assets.
→ See chapter 2 for the full history of the proposal that never landed.
01 The 50% inclusion rate — and the worked example
For 2026, one-half of every capital gain is taxable and the other half is tax-free. When you sell a non-registered asset for more than its adjusted cost base, the profit is a capital gain. Canada does not tax the whole gain — it includes 50% of it in your income, and that included half is added to your other income and taxed at your marginal rate. The remaining half is never taxed. That is why a capital gain is the most lightly taxed form of investment income in the country: interest is fully taxable, but only half a gain is.
The arithmetic is the whole point. My father-in-law, Gerry Tessier, sold a small block of non-registered shares in Vancouver this year for a $100,000 gain. Half of that — $50,000 — landed on his return; the other $50,000 did not. At a combined marginal rate around 40%, the tax on the whole $100,000 gain works out to about $20,000, an effective rate of 20% on the full profit. The calculator below opens on Gerry's numbers and shows the taxable half and the after-tax proceeds — change the gain and the rate to your own situation.
Shows: how the 50% inclusion rate turns a capital gain into taxable income and after-tax proceeds — taxable half × your marginal rate. Ignores: the cancelled 66.67% tier, provincial rate detail, the OAS clawback, the alternative minimum tax, the principal-residence exemption, and any gains sheltered inside an RRSP or TFSA — this isolates the one mechanic.
On the defaults above, the worked example returns $20,000. A $100,000 gain at 50% inclusion adds $50,000 to income; at a 40% marginal rate that is $20,000 of tax — an effective rate of 20% on the whole gain.
02 The 66.67% proposal: proposed, deferred, cancelled
The two-thirds inclusion rate was proposed, never enacted, and finally cancelled — so it changes nothing for 2026. The June 2024 federal budget proposed raising the inclusion rate from 50% to 66.67% on the portion of an individual's annual capital gains above $250,000, and on every dollar of capital gains realized by corporations and most trusts. The proposed start date was June 25, 2024. It generated months of planning around a threshold that, in the end, never carried legal force for the 2026 tax year.
The timeline matters because the rule moved twice. In January 2025 the Department of Finance announced the start date would be deferred from June 25, 2024 to January 1, 2026. Then, in March 2025, the government announced it would not proceed with the increase at all — the inclusion rate would remain 50% for all individuals, corporations, and trusts. The CRA reverted its forms and guidance accordingly. For anyone selling a cottage, a rental, or a concentrated stock position in 2026, the practical result is simple: there is no second tier, and the $250,000 line does not exist. The one place the rule still lands all at once is the deemed disposition at death, when your final return realizes every accrued gain at the same 50% inclusion.
| Stage | What was said | Status for 2026 |
|---|---|---|
| June 2024 budget | Raise inclusion to 66.67% above $250,000 (individuals); 66.67% on all corporate/trust gains | Proposed only — never enacted |
| January 2025 | Start date deferred from June 25, 2024 to January 1, 2026 | Deferred |
| March 2025 | Government will not proceed; rate stays 50% | Cancelled |
| 2026 reality | Inclusion rate is 50% for everyone, with no $250,000 threshold | In force |
Source: Department of Finance Canada — capital gains inclusion rate announcements
03 Where the rate doesn't reach: home, RRSP, TFSA
The inclusion rate only touches taxable gains, and three large pools of value sit outside it. Your principal residence is exempt: when you sell the home you have designated as your principal residence for every year you owned it, the gain is fully sheltered by the principal residence exemption, so no inclusion rate applies. Inside a TFSA, gains are never taxed — not as they grow, not on withdrawal — so the inclusion rate is simply irrelevant there. Inside an RRSP, gains also grow untaxed; the catch comes later, on withdrawal.
The RRSP point is the one people miss. An RRSP or RRIF has no capital gains treatment at all. While money is inside the plan, gains compound with no tax, which is the whole benefit of the deferral. But when you withdraw, every dollar comes out as ordinary income at 100% inclusion, taxed at your marginal rate — the favourable 50% inclusion you would get on the same gain in a non-registered account simply does not exist inside an RRSP. That argues for holding your highest-growth equities where the gain is best treated — a TFSA, where it is tax-free outright — and using registered room deliberately rather than assuming an RRSP gives a gain the same break a taxable account would.
| Where the asset sits | How a capital gain is taxed | Inclusion rate? |
|---|---|---|
| Non-registered account | 50% of the gain added to income, taxed at marginal rate | Yes — 50% |
| Principal residence | Exempt under the principal residence exemption | No — exempt |
| TFSA | Never taxed; withdrawals are tax-free | No tax at all |
| RRSP / RRIF | Untaxed inside; withdrawals taxed as ordinary income (100%) | No — fully taxed on exit |
Source: CRA — Income Tax Folio S1-F3-C2, Principal Residence
I watched a lot of Canadians spend the back half of 2024 reorganizing portfolios around a 66.67% rate that never arrived. Some of them triggered gains early, voluntarily, to "beat" a threshold that was first deferred and then cancelled — locking in tax bills they could have spread out or avoided. The lesson I took from Gerry's year is the dull one: build your plan on the rule that is actually in force, not the headline. For 2026 that rule is 50% inclusion, no $250,000 tier, and no tax at all on gains inside your TFSA or on your principal home. If the inclusion rate ever does change, it will come with a start date and a bill number — until then, half is the number that matters.
FAQ
What is the capital gains inclusion rate in Canada for 2026?
For 2026 the capital gains inclusion rate is 50% — one-half of a capital gain is added to your taxable income. The 2024 federal proposal to raise the rate to 66.67% on individual gains above $250,000 was deferred to January 1, 2026 and then cancelled, so no two-thirds tier applies. Half your gain is taxed at your marginal rate; the other half is tax-free.
Did the 66.67% capital gains inclusion rate take effect?
No. The June 2024 federal budget proposed raising the inclusion rate to 66.67% on individual gains above $250,000 a year, and on all corporate and most trust gains. Implementation was deferred from June 25, 2024 to January 1, 2026, and in March 2025 the government announced it would not proceed. The rate stays 50% for everyone in 2026.
Are capital gains taxed inside an RRSP or TFSA?
No capital gains tax applies inside an RRSP or a TFSA. Gains grow untaxed in both. TFSA withdrawals are entirely tax-free. RRSP and RRIF withdrawals are taxed as ordinary income at 100% inclusion, so a gain earned inside an RRSP loses the 50% inclusion treatment it would get in a non-registered account.
Sources
Regulator references
- CRA — Line 12700: Taxable capital gains · the 50% inclusion rate, how the taxable half is calculated, and reportingHow taxable capital gains are calculated and reported at line 12700.Last verified: 2026-06-25
- Department of Finance Canada — capital gains inclusion rate announcements · the June 2024 proposal, the deferral to January 1, 2026, and the decision not to proceedThe federal announcement deferring the proposed change to the capital gains inclusion rate.Last verified: 2026-06-25
- CRA — Income Tax Folio S1-F3-C2, Principal Residence · the principal residence exemption and its interaction with capital gainsThe CRA's technical folio on the principal residence exemption, including the ordinarily-inhabited test.Last verified: 2026-06-25
Calculator unit tests · the assertions this page's worked example is checked against, and their last result
Changelog
- 2026-07-06 — added in-article links to related guides
- 2026-06-25 — initial publish (new format)
Run this rule against your situation
Model your capital gains realization at 50% inclusion across your full retirement projection to age 95 — folded in with your RRSP, TFSA, OAS clawback, and provincial rates.
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Jordan Reeves
Founder of Talk Through Wealth. A software engineer for over a decade before turning to retirement planning, Jordan built the projection engine after watching family members get fragmented, country-by-country advice that never reconciled. He writes about retirement the way the engine computes it: month-by-month, lifetime-long, and skeptical of any rule of thumb that hasn't been run through the math.