--- title: "Capital Gains Inclusion Rate 2026: Still One-Half" url: https://www.everstonecpa.com/tax-update/capital-gains-inclusion-rate description: "The capital gains inclusion rate increase to two-thirds was deferred, then cancelled. It never took effect. See what that settles for planning." type: tax-update updated: 2026-10-04 summary: "The proposed increase in the capital gains inclusion rate from one-half to two-thirds was deferred and then cancelled. It never took effect. Capital gains continue to be included in income at one-half." faq_count: 4 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Tax updates](https://www.everstonecpa.com/tax-updates) Capital gains inclusion rate: still one-half Capital gains # Capital gains inclusion rate: still one-half — the proposed increase was cancelled and never took effect By EverStone CPA · Updated August 2026 An inclusion rate matters most in the year of a sale, and the planning that changes the number happens before it. [Advisory work](https://www.everstonecpa.com/advisory-services) is where that conversation belongs. The figures on this page, in one view. **Quick answer:** The proposed increase in the capital gains inclusion rate from one-half to two-thirds was deferred and then cancelled. It never took effect. Capital gains continue to be included in income at one-half. **In force** · The 50% rate continues to apply This measure is law and applies now. ## How it works Selling something for more than you paid gives a capital gain. Only a fraction of the gain, the inclusion rate, is added to your income and taxed at your ordinary rate. The inclusion rate is one-half. On a $100,000 gain, $50,000 is added to your income and taxed; the other $50,000 is not taxed at all. In the 2024 federal budget the government proposed raising the rate to two-thirds. That proposal was deferred in January 2025 and then cancelled outright in March 2025. It never took effect, and the one-half rate applied throughout. ## How it applies to you This affects anyone who sells an asset at a profit outside a registered account: shares, a rental property, a cottage, a business, or equipment held by a corporation. It does not affect your [principal residence](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/personal-income/line-12700-capital-gains/principal-residence-other-real-estate.html) if it qualifies for the principal residence exemption, and it does not affect gains inside a TFSA or RRSP, which have their own treatment. Because of the cancellation, planning done in 2024 for a higher rate — accelerating a sale, triggering a gain early — rested on a rule that never arrived. Any transaction you made stands, with real tax consequences. **Want a CPA to do your return?** Personal returns start at $125, and self-employed or rental returns are commonly $275–$500, quoted before we start. See [our personal tax service](https://www.everstonecpa.com/personal-taxes), or [get a personal tax quote](https://www.everstonecpa.com/book-online?service=personal#enquiry-form). [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=personal#enquiry-form) ## How to calculate it To find the taxable portion of a capital gain: Calculation steps | Step | Detail | | Take the proceeds of sale | what you sold it for | | Subtract the adjusted cost base | broadly, what you paid plus costs of acquiring it | | Subtract the costs of selling | commissions, legal fees | | The result is your capital gain | | | Multiply by the inclusion rate | one-half | | That is the amount added to your income | taxed at your marginal rate | Worked through: sell shares for $250,000 that you bought for $100,000, with $5,000 of selling costs. The gain is $250,000 − $100,000 − $5,000 = $145,000. At the one-half inclusion rate, $72,500 is added to your income for the year. The remaining $72,500 is not taxed. ## What changed The increase was announced in the 2024 federal budget, deferred on 31 January 2025 to 1 January 2026, and then cancelled on 21 March 2025. No version of it ever came into force. ## What to do The one-half inclusion rate is the rule. The increase was announced, deferred and cancelled, and no version of it ever applied. One part of the same package was kept: the [lifetime capital gains exemption](https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-25400-capital-gains-deduction.html) increase to $1.25 million. Two measures announced together met different fates, which is exactly why “announced” and “in force” are worth distinguishing. Before triggering a large gain deliberately, the timing matters more than the rate — spreading a sale across two tax years can keep more of it in lower brackets. **The practical point.** If a 2024 or 2025 transaction was planned, reported or accrued on the assumption of a two-thirds inclusion rate, it should be revisited. Some returns were filed during the period when the increase was still expected. ## The terms used on this page Capital gain The profit when you sell an asset for more than its adjusted cost base. Inclusion rate The fraction of a capital gain that is included in taxable income. One-half. Adjusted cost base Broadly what you paid for an asset, plus the costs of acquiring it and certain later adjustments. Marginal rate The rate of tax on your next dollar of income, which is what a capital gain is taxed at once included. ## Common questions about capital gains inclusion rate: still one-half **Do I still pay tax on half my capital gain?** Yes. The one-half inclusion rate continues to apply. The increase to two-thirds was announced in the 2024 federal budget, deferred, then cancelled on 21 March 2025 — no version of it ever came into force, so nothing about the way your gain is taxed has changed. **I filed a return assuming the higher rate. What now?** It is worth revisiting. Some returns were filed during the window when the increase was still expected, and a 2024 or 2025 transaction that was planned, reported or accrued at a two-thirds inclusion rate would have reported more income than it should have. **How much of a $145,000 gain is taxed?** Half of it. At the one-half inclusion rate, $72,500 is added to your income for the year and the remaining $72,500 is not taxed. What you actually pay on that $72,500 depends on your marginal rate. **Does this affect the lifetime capital gains exemption?** No, and this is the most common confusion. The two measures were announced together, so the cancellation of the inclusion rate increase led some to assume the exemption increase went with it. It did not — the exemption remains at $1.25 million. ## Where this comes from Every figure on this page is taken from the source below, not from interpretation: - [Prime Minister of Canada — cancellation announcement, 21 March 2025](https://www.pm.gc.ca/en/news/news-releases/2025/03/21/prime-minister-mark-carney-cancels-proposed-capital-gains-tax-increase) - [Department of Finance — deferral announcement, 31 January 2025](https://www.canada.ca/en/department-finance/news/2025/01/government-of-canada-announces-deferral-in-implementation-of-change-to-capital-gains-inclusion-rate.html) **General information, not tax advice.** This page explains a change in general terms. It cannot account for your circumstances and does not create a professional relationship. Confirm anything that affects a decision — [send an enquiry](https://www.everstonecpa.com/book-online?service=personal#enquiry-form). 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