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

The capital gains inclusion rate in Canada for 2026 is 50%. This means half of your capital gain is added to your taxable income and taxed at your marginal rate. The remaining 50% is tax-free. For example, on a $20,000 capital gain, $10,000 is taxable. If your marginal rate is 30%, you'd pay $3,000 in tax — an effective rate of 15% on the full gain. The proposed increase to 66.67% was never enacted and was officially scrapped in early 2025.

Can I offset capital gains with capital losses in Canada?

Yes. Capital losses can be used to offset capital gains, reducing or eliminating the tax you owe. If your losses exceed your gains in a year, you can carry the net capital loss back 3 years or forward indefinitely to offset gains in other years. However, capital losses can only offset capital gains — they cannot be used to reduce regular employment or other income. Watch for the superficial loss rule: if you repurchase the same investment within 30 days, the loss is denied.

Is cryptocurrency taxable in Canada?

Yes. The CRA treats cryptocurrency as a commodity, and selling or exchanging crypto for more than you paid triggers a capital gain. The 50% inclusion rate applies — half the gain is added to your income. Trading one crypto for another (e.g., Bitcoin to Ethereum) is also a taxable disposition. If you're a frequent trader, the CRA may classify your crypto activity as business income, which is 100% taxable rather than 50%. Losses on crypto can offset other capital gains.

Canadian Capital Gains Tax Explained (2026) | MapleCalc.ca

Q: Do I pay capital gains tax on my home in Canada?

No — if the property was your principal residence for every year you owned it, the entire gain is exempt under the Principal Residence Exemption (PRE). You can designate one property per year as your principal residence. You must report the sale on your tax return even if the gain is fully exempt. However, the property flipping rules (since 2023) treat gains on properties held less than 365 days as fully taxable ordinary income, not capital gains, unless you meet specific exceptions like job relocation.

How Capital Gains Tax Works in Canada

Canada does not have a separate capital gains tax rate. Instead, a portion of your gain is added to your regular income and taxed at your marginal rate. The mechanism is the inclusion rate, which determines how much of the gain counts as taxable income.

As of 2026, the inclusion rate is 50%. Half your capital gain is added to your taxable income. The other half is tax-free.

Example: you buy shares for $10,000 and sell them for $30,000. Your capital gain is $20,000. At the 50% inclusion rate, your taxable capital gain is $10,000. This $10,000 is added to your other income — employment, pension, rental, whatever — and taxed at your marginal rate.

If your marginal rate is 30%, you'd pay $3,000 in tax on a $20,000 gain. That's an effective rate of 15% on the full gain. At a 40% marginal rate, the effective capital gains rate is 20%. At the top combined rate (~53% in Ontario), the effective rate on capital gains is roughly 26.5% — still significantly better than the rate on equivalent employment or interest income.

The 2024–2025 Inclusion Rate Drama

In the April 2024 federal budget, the Liberal government proposed increasing the capital gains inclusion rate from 50% to 66.67% (two-thirds) on gains above $250,000 for individuals, and on all gains for corporations and trusts. This would have been the most significant change to capital gains taxation in Canada in over two decades.

The proposal triggered a wave of tax planning: business owners accelerated asset sales, cottage owners rushed to sell before the proposed effective date, and financial advisors scrambled to model the impact. The CRA began adjusting withholding and assessment processes as if the change were a done deal.

It was never enacted. The legislation did not pass through Parliament before the 2025 federal election. In early 2025, Prime Minister Mark Carney announced the proposed increase would be scrapped entirely.

The inclusion rate remains at 50% for 2024, 2025, and 2026 — for all taxpayers, at all gain levels, including corporations and trusts. If the CRA collected tax from you at the higher 66.67% rate during 2024, you may be owed a reassessment. Consult a tax professional to ensure you received the correct treatment.

What Triggers a Capital Gain

A capital gain occurs when you dispose of a capital property for more than its adjusted cost base (what you paid, plus any acquisition costs). Common triggers:

Selling investments — stocks, ETFs, bonds, mutual funds, or cryptocurrency held in a non-registered account
Selling real estate other than your principal residence — rental properties, vacation homes, land
Selling a business or business assets — shares of a private corporation, equipment, goodwill
Deemed dispositions — at death, your estate is treated as if you sold everything at fair market value. This can trigger large capital gains on appreciated assets.
In-kind transfers into or out of registered accounts (RRSP, TFSA). The transfer is a deemed disposition at market value.

What is not a taxable event: unrealized gains (you hold an asset that went up but haven't sold it), and any buying or selling inside a TFSA or RRSP. Gains within registered accounts are sheltered — only withdrawals from an RRSP are taxable, and TFSA withdrawals are always tax-free.

Principal Residence Exemption

Your primary home is exempt from capital gains tax under the Principal Residence Exemption (PRE). If you lived in the property as your principal residence for every year you owned it, 100% of the gain is tax-free. Full stop.

The math uses the "one-plus" formula: the exempt portion equals (years designated + 1) ÷ years owned × total gain. The "+1" gives you a free bonus year, which is useful when you buy and sell in different calendar years. If you owned and designated the home for every year, the exemption covers the entire gain.

You can designate one property per year as your principal residence. If you own both a house and a cottage, you'll need to choose which one to designate for each year — typically whichever had the larger gain. The other property's gain will be partially or fully taxable on sale.

Property flipping rules (since 2023): gains on residential properties held for less than 365 days are treated as fully taxable business income — not capital gains. The 50% inclusion rate does not apply; 100% of the gain is taxable at your marginal rate. Exceptions exist for job relocation, death, divorce, disability, or the birth of a child.

You must report the sale on your tax return even if the gain is fully exempt under the PRE. Failure to report can result in penalties and the CRA may deny the exemption.

Capital Losses

If you sell an investment for less than you paid, you have a capital loss. Capital losses are valuable because they offset capital gains — reducing or eliminating the tax you owe.

Capital losses can only offset capital gains — they cannot reduce employment income, rental income, or other types of income.
If your losses exceed your gains in a year, you can carry the net loss back 3 years to offset gains you already paid tax on (and get a refund), or carry it forward indefinitely to offset future gains.
Superficial loss rule: if you sell at a loss and repurchase the same (or identical) investment within 30 days before or after the sale, the loss is denied. This includes purchases in your spouse's accounts and contributions to your RRSP or TFSA. The denied loss is added to the cost base of the replacement property.

Tax-loss harvesting — deliberately selling losers to offset winners — is a legitimate strategy, but the superficial loss rule means you must wait at least 31 days before repurchasing the same security. Many investors sell one ETF and immediately buy a similar (but not identical) ETF to maintain market exposure while crystallizing the loss.

Calculating Your Tax by Province

Because capital gains are taxed at your marginal rate (on the 50% included portion), the effective rate varies by province and income level. Here are some examples:

Ontario at $100,000 income: marginal rate ~43.41% → effective capital gains rate ~21.7%
Alberta at $100,000 income: marginal rate ~30.5% → effective capital gains rate ~15.25%
BC at $100,000 income: marginal rate ~40.7% → effective capital gains rate ~20.35%
Quebec at $100,000 income: marginal rate ~45.7% → effective capital gains rate ~22.85%

The pattern is clear: lower income and lower-tax provinces mean a lower effective rate on capital gains. In Alberta at $50,000, the effective rate drops to roughly 12.5%. In Ontario at the top bracket, it reaches roughly 26.8%. This is still meaningfully better than the rate on the same amount of employment income, which is why capital gains are considered the most tax-efficient form of investment income (after eligible dividends at certain income levels).

How to Minimize Capital Gains Tax

Use your TFSA. All gains inside a TFSA are completely tax-free — no inclusion rate, no reporting. If you have available room, this is the single best shelter for growth investments.
Use your RRSP. Gains inside an RRSP are tax-deferred. You pay no capital gains tax while the investments grow, but withdrawals are taxed as ordinary income. If your tax rate at withdrawal is lower than today, the deferral is worth it.
Tax-loss harvesting. Sell investments at a loss to offset gains realized elsewhere. Watch the superficial loss rule — wait 31 days before repurchasing the same security.
Donate publicly listed securities to charity. You receive the full donation tax credit and pay zero capital gains tax on the appreciated amount. This is one of the most tax-efficient ways to give in Canada.
Time your dispositions. If you expect lower income next year — retirement, sabbatical, parental leave — defer the sale to realize the gain in a lower tax bracket.
Prescribed-rate spousal loans. You can lend money to a lower-income spouse at the CRA's prescribed rate, and any investment gains are taxed in their hands at their lower marginal rate. Attribution rules apply — consult an advisor to set this up correctly.

Try It Yourself

Use our Capital Gains Tax Calculator to see exactly how much tax you'd owe on a capital gain in your province. Enter the gain amount, your other income, and your province — the calculator applies the 50% inclusion rate and shows the combined federal and provincial tax at your marginal rate.

Pair it with our Income Tax Calculator to see your full tax picture, or our Dividend Tax Credit Calculator to compare the tax treatment of capital gains versus Canadian dividends in your province.

Understanding Canadian Capital Gains Tax in 2026