Canadian corporate tax rates 2026
Combined federal and provincial rates for the general rate and the small business rate. Applies to Canadian resident corporations.
Federal rates
General corporate rate
15%
On taxable income
Small business rate
9%
First $500k active income (CCPC)
Investment income (CCPC)
38.67%
Before refundable tax
M&P credit
1.5%
Reduces rate on eligible income
Combined federal + provincial rates — 2026
The general rate applies to income above the small business limit. The SBD rate applies to the first $500,000 of active business income for eligible CCPCs.
| Province / Territory | General rate | Small business rate | Prov. general | Prov. SBD |
|---|---|---|---|---|
| Alberta | 23.0% | 11.0% | 8.0% | 2.0% |
| British Columbia | 27.0% | 11.0% | 12.0% | 2.0% |
| Manitoba | 27.0% | 12.0% | 12.0% | 3.0% |
| New Brunswick | 29.0% | 12.5% | 14.0% | 3.5% |
| Newfoundland & Labrador | 30.0% | 12.5% | 15.0% | 3.5% |
| Nova Scotia | 31.0% | 13.5% | 16.0% | 4.5% |
| Northwest Territories | 26.5% | 11.5% | 11.5% | 2.5% |
| Nunavut | 27.0% | 12.0% | 12.0% | 3.0% |
| Ontario | 26.5% | 12.2% | 11.5% | 3.2% |
| Prince Edward Island | 31.0% | 13.5% | 16.0% | 4.5% |
| Quebec | 26.5% | 12.2% | 11.5% | 3.2% |
| Saskatchewan | 27.0% | 12.0% | 12.0% | 2.0% |
| Yukon | 27.0% | 12.0% | 12.0% | 2.0% |
Provincial columns show the provincial portion only. The combined rate adds the 15% federal general (or 9% federal SBD) to the provincial rate. Rates verified against provincial budgets as of October 2026. Source: CRA — Corporation tax rates.
Key concepts
What is a CCPC?
A Canadian-Controlled Private Corporation is a corporation incorporated in Canada that is not publicly listed and is controlled by Canadian residents. CCPCs are eligible for the federal small business deduction — reducing the federal rate on the first $500,000 of active business income from 15% to 9%.
What is the Small Business Deduction?
The SBD reduces the federal corporate rate from 15% to 9% on the first $500,000 of active business income earned by a CCPC. Provinces offer a corresponding provincial SBD that lowers their own rate on the same income. The $500,000 limit is shared among associated corporations — you can't split it between related companies.
How passive income affects the SBD
If a CCPC earns more than $50,000 in passive investment income in a year, the $500,000 business limit starts to phase down. At $150,000 of passive income, the SBD is eliminated entirely. This "clawback" was introduced in 2019 to discourage using corporations as passive investment vehicles.
Investment income inside a CCPC
Investment income (interest, foreign dividends, rental income from non-associated parties) earned inside a CCPC is taxed at a high corporate rate — approximately 50.67% federally in most provinces. However, 30.67% of that is "refundable" when the corporation pays taxable dividends. This mechanism ensures passive income is ultimately taxed at individual rates.
Manufacturing & Processing (M&P) credit
Corporations that earn M&P income qualify for a 1.5% federal tax credit, effectively reducing the general federal rate from 15% to 13%. Several provinces also offer matching M&P credits. The credit applies to income from goods manufactured or processed in Canada for sale.