Tax brackets 2026: the federal and BC bands — and BC raises its lowest rate
Quick answer: Federal tax for 2026 runs in five bands from 14% to 33%, starting at $58,523. British Columbia raised its lowest rate from 5.06% to 5.6% partway through the year, which is why BC payroll withholding switched to a prorated 6.14% from the first July pay run.
Outside BC? This page sets out the federal and BC bands. For your province’s rates see Alberta, Ontario or Manitoba tax facts.
Looking ahead: see the 2027 tax brackets.
The 2026 federal tax brackets
| Figure | 2026 |
|---|---|
| $0 to $58,523 | 14% |
| $58,523.01 to $117,045 | 20.5% |
| $117,045.01 to $181,440 | 26% |
| $181,440.01 to $258,482 | 29% |
| Over $258,482 | 33% |
Each rate applies only within its band. A dollar over $58,523 is taxed at 20.5%, not your whole income, so a raise never leaves you worse off.
How it works
Canadian personal tax is charged in bands. Federal tax for 2026 begins at 14% on the first $58,523 of taxable income and rises through 20.5%, 26% and 29% to 33% above $258,482.
Provincial tax is charged separately, on its own brackets, and added to the federal amount. British Columbia runs seven bands for 2026, from 5.6% on the first $50,363 up to 20.5% above $265,545.
The BC bottom rate is the figure that changed. On 17 February 2026 the province announced an increase from 5.06% to 5.6%, applying to 2026 and later years. The BC basic reduction rose at the same time, from $562 to $690.
Since the change came mid-year, the CRA set a prorated 6.14% on the lowest band from the first July payroll to balance the year.
How it applies to you
Everyone filing a Canadian return, and, more urgently, every BC employer running payroll.
For an incorporated owner the federal bands are what set the marginal cost of taking another dollar of salary, and therefore sit underneath every salary-versus-dividend calculation.
BC employers should confirm payroll switched to July tables. Using 5.6% instead of 6.14% leaves employees short at filing.
How to calculate it
The BC brackets for 2026, and what withholding uses from July:
| Step | Detail |
|---|---|
| $0 to $50,363 | 5.6% — withheld at a prorated 6.14% from July |
| $50,363.01 to $100,728 | 7.7% |
| $100,728.01 to $115,648 | 10.5% |
| $115,648.01 to $140,430 | 12.29% |
| $140,430.01 to $190,405 | 14.7% |
| $190,405.01 to $265,545 | 16.8% |
| Over $265,545 | 20.5% |
Only lowest-band withholding is prorated. The annual 2026 BC rate is 5.6%; the 6.14% offsets six months of under-withholding. The CRA’s July guide notes some changes were not yet law, so confirm before relying on them.
What changed
Announced 17 February 2026, the BC increase covers all of 2026. The CRA set a prorated 6.14% for the last six months, and the BC basic reduction rose from $562 to $690.
What to do
If you run BC payroll, check that the July tables were applied. This is a mid-year change that produces no error message and shows up only when the T4s are compared to what people actually owe.
If you are planning compensation, use the federal bands above for the marginal cost of salary, and remember provincial tax stacks on top rather than replacing it.
Do not read a bracket as applying to your whole income. Only the slice inside the band is taxed at that rate.
The practical point. Confirm your BC payroll software picked up the July change, or employees will be short at filing time.
Brackets matter most when you can choose when income lands, as an owner-manager can; personal tax returns for owner-managers use them that way.
The terms used on this page
- Marginal rate
- The rate applying to the next dollar earned, not to all income.
- Taxable income
- Income after deductions, which is what the brackets are applied to, not gross pay.
- Prorated rate
- A temporary withholding rate used to correct part of a year at the old rate, so the annual total comes out right.
- BC tax reduction
- A British Columbia credit that lowers tax for lower-income filers; its basic amount rose from $562 to $690 for 2026.
- Bracket creep
- The effect of inflation pushing income into higher bands, which indexing the brackets is designed to offset.
Common questions about tax brackets 2026: the federal and BC bands
What are the federal tax brackets for 2026?+
Did BC change its tax rate?+
Why is BC payroll withholding at 6.14%?+
If I move into a higher bracket, is all my income taxed at that rate?+
Do I add the federal and provincial rates together?+
Where this comes from
Every figure on this page is taken from the source below, not from interpretation:
- CRA — Current year tax rates and income brackets (2026)
- CRA — T4032BC payroll deductions tables, July 2026, general information
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.
Have a question about this?
Ask free through the quick-question form; a CPA replies within one business day. Need more? A 45-minute Advice Call is $225 plus applicable tax, credited to your first invoice if you become a client within 60 days. Want us to take it on? Send an enquiry.
Brackets decide the rate; what falls into each one is decided months earlier, and a personal return prepared against them is where that is worked out.
“…We switched to him last year for both our personal and small-business taxes — responsive, knowledgeable and quick.”