Capital Gains Inclusion Rate in 2026: What Still Applies After the Pause

Key takeaways

• The CRA is administering the 50% inclusion rate for individuals on the first $250,000 of net capital gains
• The two-thirds rate applies to gains above $250,000 for individuals, and to all gains for corporations and most trusts
• Legislation passed in 2026 formally enacted the rates that had been administered since June 25, 2025
• The $250,000 annual threshold is per taxpayer, not per property or disposition
• Capital gains reserves, installment sales, and farm property rules all interplay with the new rates

The capital gains inclusion rate story that dominated Canadian tax planning headlines from the 2024 budget through Parliament's prorogation finally has a clear legal conclusion. With the 2026 budget formalizing what the CRA had been administering administratively, taxpayers can now plan with certainty.

What the rate change actually means

An inclusion rate is not your tax rate. It determines what fraction of a capital gain is included in your taxable income. At 50%, if you sell a stock for a $100,000 gain, only $50,000 is added to your income. At two-thirds, $66,667 is added.

Your actual tax on that gain depends on your marginal rate in the year of disposition. For an Ontario resident in the top bracket, the effective tax rate on a capital gain at 50% inclusion is roughly 26.76%; at two-thirds inclusion it rises to about 35.69%. The difference on a $100,000 gain is approximately $8,930.

The $250,000 individual threshold

The threshold is measured against net capital gains per calendar year. If you have a $300,000 gain and a $100,000 loss, your net gain is $200,000 — under the threshold, so the full 50% inclusion rate applies. If your net gain is $300,000, the first $250,000 is at 50% and the remaining $50,000 is at two-thirds.

The $250,000 threshold is not transferable between spouses. Each individual gets their own $250,000 at the lower rate. This creates a planning opportunity for couples who can arrange dispositions to spread gains across both returns.

Corporations and trusts: no threshold

Corporations and most trusts pay the two-thirds inclusion rate on all capital gains, with no threshold. This makes the corporation-as-investment-vehicle calculation less attractive for accumulating passive investments, particularly for gains on equities and investment properties.

The Capital Dividend Account — which tracks the non-taxable portion of capital gains — still works under the new rate. On a $100,000 gain at two-thirds inclusion, $33,333 goes to the CDA rather than $50,000. This reduces the amount that can be paid as a tax-free capital dividend to the shareholder.

Planning around the change

For investments held personally, the $250,000 annual threshold favours spreading dispositions across multiple tax years. Selling a large position entirely in one year likely pushes you above the threshold; selling in tranches over two or three years keeps gains under it.

For small business owners with significant corporate investment portfolios, the math has shifted. Holding appreciated investments inside a corporation is now more costly from a total tax perspective, because corporate gains attract the higher rate and then dividends are paid with less CDA shelter. Consultation with a CPA who specializes in owner-manager tax is recommended before any significant corporate portfolio restructuring.

Capital gains reserves

If you sold property and elected to spread the gain over multiple years using a capital gains reserve (available when proceeds are receivable over time), the inclusion rate that applied at the time of sale is the rate used in each subsequent year. Gains deferred from pre-June 25, 2025 dispositions at 50% inclusion are not affected by the new two-thirds rate.