2026 Federal Budget: Building Canada's Future

The annual RRSP contribution limit increases to $32,490 for 2026, up from $31,560 in 2025. The limit continues to be indexed to the average wage growth rate. Canadians with unused RRSP room can make catch-up contributions to reduce their 2025 tax owing.

The Tax-Free Savings Account annual contribution limit remains at $7,000 for 2026. This maintains the amount set in 2024 and continues to provide Canadians with tax-free growth on investments. Cumulative TFSA room rises to $102,000 for those who have been eligible since 2009.

The First Home Savings Account program receives additional funding to expand outreach and application processing. Eligibility criteria are broadened to include Canadians who have not owned a principal residence in the preceding four years, down from the previous five-year look-back period. First-time buyers can now access combined FHSA and RRSP Home Buyers' Plan savings of up to $75,000 for a down payment.

The Canada Carbon Rebate amounts are recalibrated for 2026 to reflect revised fuel charge proceeds. Quarterly rebate payments to eligible Canadians increase in most provinces. Rural supplement recipients see a 20% top-up to account for limited access to low-carbon transportation alternatives.

The Year's Maximum Pensionable Earnings (YMPE) for 2026 rises to $73,200, and the Year's Additional Maximum Pensionable Earnings (YAMPE) for CPP2 reaches $80,400. Employees and employers each contribute 5.95% on earnings between the basic exemption and YMPE, plus 4% on the CPP2 band. Self-employed individuals pay both portions totalling 11.9% on the base band.

The 15% global minimum tax framework (Pillar Two) receives technical amendments to align with OECD guidance on qualified domestic minimum top-up tax. Large multinational corporations with global revenues exceeding €750 million are subject to the Undertaxed Profits Rule where other jurisdictions have not implemented equivalent measures. The changes ensure Canadian-headquartered multinationals are not disadvantaged competitively.

A 30% refundable investment tax credit is available for capital expenditures on qualifying clean technology manufacturing and processing equipment. The credit applies to equipment used in manufacturing of clean energy technologies, including solar panels, wind turbines, and battery storage systems. Prevailing wage and apprenticeship conditions apply to receive the full credit rate.

The Scientific Research and Experimental Development investment tax credit rate for Canadian-controlled private corporations is restored to 35% on up to $3 million of eligible expenditures. The enhanced rate previously phased down as the prior-year taxable capital threshold was reduced; the restoration removes the phase-down for smaller CCPCs with taxable capital under $15 million. Larger corporations continue to claim 15%.

The Disability Tax Credit amount and supplemental amount for persons under 18 are indexed to inflation for 2026. The base federal DTC amount rises to approximately $9,900, generating a maximum federal tax credit of $1,485. Individuals who transfer unused portions to supporting persons can reduce the combined family tax burden.

The Canada Child Benefit maximum payment amounts increase by approximately 2.7% to reflect inflation adjustment. For children under six, the maximum annual payment rises to roughly $7,790, and for children six to seventeen, to approximately $6,570. Phase-out thresholds are adjusted upward so fewer middle-income families experience benefit reductions.