Every province's capital gains tax rate — how inclusion rates work and where your gains are taxed least
Canada does not have a separate capital gains tax. Instead, a portion of capital gains — called the "inclusion rate" — is added to your regular income and taxed at your marginal rate. The inclusion rate for individuals on the first $250,000 of annual capital gains remains 50% in 2026. Understanding how the 50% inclusion rate interacts with each province's tax brackets determines your true after-tax return on investments, real estate, and business sales.
| Province | Top Marginal Income Rate | Cap Gains Rate (50% inclusion) | Cap Gains Rate (66.67% inclusion) |
|---|---|---|---|
| Alberta | 48.00% | 24.00% | 32.00% |
| Saskatchewan | 47.50% | 23.75% | 31.67% |
| Ontario | 53.53% | 26.77% | 35.69% |
| British Columbia | 53.50% | 26.75% | 35.67% |
| Manitoba | 50.40% | 25.20% | 33.60% |
| New Brunswick | 52.50% | 26.25% | 35.00% |
| Quebec | 53.31% | 26.65% | 35.54% |
| Nova Scotia | 54.00% | 27.00% | 36.00% |
| PEI | 51.37% | 25.69% | 34.25% |
| Newfoundland | 54.80% | 27.40% | 36.53% |
| Capital Gain | Ontario Tax | Alberta Tax | Difference |
|---|---|---|---|
| $50,000 | $8,900 | $8,200 | $700 more in ON |
| $100,000 | $18,200 | $16,800 | $1,400 more in ON |
| $250,000 | $47,500 | $42,900 | $4,600 more in ON |
| $500,000 | $106,000 | $93,600 | $12,400 more in ON |
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Get KOHO Free — Code 45ET55JSYAThe principal residence exemption (PRE) allows Canadians to shelter capital gains on the sale of a home that was their principal residence for every year they owned it. There is no dollar limit on this exemption — the entire gain is tax-free if the property qualifies for all years owned. The PRE applies in every province, making owner-occupied real estate one of the most powerful tax shelters available to Canadian families regardless of province.
Several strategies can reduce capital gains tax: (1) Spreading gains across multiple tax years to stay below the $250,000 threshold where the 2/3 inclusion rate kicks in. (2) Donating appreciated securities directly to charity — the donation triggers zero capital gains tax and generates a donation receipt for the full fair market value. (3) Using a corporation — while the 2/3 inclusion rate applies to corporations on all gains, the tax is deferred until funds are withdrawn personally. (4) Capital loss harvesting — realizing losses in the same year as gains to offset taxable income.
The LCGE for 2026 allows qualifying small business shares, farm property, and fishing property to be sold with up to $1,250,000 of capital gains completely exempt from tax. This exemption is per-person, meaning spouses can each claim it for a combined $2,500,000 of tax-free gains. At Alberta's 24% capital gains rate (50% inclusion), the LCGE saves approximately $300,000 in federal and provincial tax — a transformational benefit for business owners planning their exit.
Salary, dividends, and capital gains — all compared.
Canada Tax Calculator →Also see: Dividends by Province | RRSP Withdrawal Tax | Lowest Tax Provinces