Canada Capital Gains Inclusion Rate Calculator 2026

Calculate your effective inclusion rate and taxable capital gain under the proposed two-tier system.

💡 Quick Example — Department of Finance Backgrounder▶

Scenario: An individual in 2025 realizes:

Capital gain of $450,000
Capital loss of $50,000
Net capital loss from 2017 of $150,000 (original capital loss was $300,000 at the 75% inclusion rate year)

Step 1 — Net Capital Gain: $450,000 − $50,000 = $400,000

Step 2 — Tier Split:

Tier 1: $250,000 × 50% = $125,000
Tier 2: $150,000 × 66.67% = $100,000
Total taxable before losses = $225,000

Step 3 — Apply Net Capital Loss ($150,000):

$75,000 offsets Tier 2: $75,000 × 4/3 = $100,000
$75,000 offsets Tier 1: $75,000 × 1 = $75,000
Total deduction = $175,000

Final Taxable Capital Gain: $225,000 − $175,000 = $50,000

👤 Taxpayer Information

Taxpayer Type

Individual✓ $250,000 threshold Corporation66.67% flat, no threshold Trust (other than GRE/QDT)66.67% flat, no threshold Graduated Rate Estate✓ $250,000 threshold Qualified Disability Trust✓ $250,000 threshold

💰 Income Inputs

Total Capital Gains in 2026 ($)

Total Capital Losses in 2026 ($)

Net Capital Losses from Prior Years ($)

Year the Prior Loss Was Incurred

Lifetime Capital Gains Exemption (LCGE) Claimed ($)

Maximum $1,250,000 lifetime (indexed). Reduces taxable income, not the gain itself.

PROPOSED 2026 INCLUSION RATE

Net Capital Gains for 2026 $400,000.00

Tier 1 (first $250,000 @ 50%) $250,000.00

Tier 1 Taxable Portion $125,000.00

Tier 2 (excess @ 66.67%) $150,000.00

Tier 2 Taxable Portion $100,000.00

      Total Taxable Capital Gain (before losses)
      $225,000.00
    

Effective Inclusion Rate 56.25%

Net Capital Loss Deduction (adjusted) −$175,000.00

LCGE Deduction −$0.00

      Final Taxable Capital Gain
      $50,000.00
    

📊 Comparison: Proposed 2026 vs Old 2025 Rules

Proposed 2026 taxable gain (before losses): $225,000.00

Old 2025 taxable gain (50% flat): $200,000.00

Additional taxable income under proposed rules: $25,000.00

Percentage increase in taxable gain: 12.50%

Tier 1

Tier 2

Tier 1 (50%): $250,000 Tier 2 (66.67%): $150,000

Effective Inclusion Rate: 56.25%

56.25%

0%50%66.67%100%

📋 Reporting: Report the taxable capital gain on Line 12700 of your T1 return. Complete Schedule 3.

📊 Tier Breakdown

Tier	Amount	Inclusion Rate	Taxable Portion
Tier 1 (threshold)	$250,000.00	50%	$125,000.00
Tier 2 (excess)	$150,000.00	66.67%	$100,000.00
Total	$400,000.00	56.25%	$225,000.00

⚠️ Disclaimer: This calculator provides an estimate for informational purposes only. The capital gains inclusion rate increase was deferred to January 1, 2026, but the government has not confirmed whether the legislation will proceed. Actual tax treatment is determined by the CRA based on your tax return and individual circumstances. This tool follows the Department of Finance backgrounder (June 2024) and the CRA T4037 guide. Always verify with the CRA or a qualified tax professional.

❓ Frequently Asked Questions

What is the capital gains inclusion rate?

The inclusion rate is the percentage of a capital gain that must be included in your taxable income. Currently it is 50%. The proposed 2026 system would increase this to 66.67% for gains above $250,000 for individuals.

What is the proposed 2026 change?

Under the proposed system, individuals pay 50% on the first $250,000 of net capital gains and 66.67% on the excess. Corporations pay 66.67% on all gains without a threshold. The change was announced for January 1, 2026.

Does the $250,000 threshold apply to me?

Yes if you are an individual, a Graduated Rate Estate (GRE), or a Qualified Disability Trust (QDT). Corporations and other trusts do not get the threshold — they pay 66.67% on all gains.

How do I calculate my taxable capital gain?

For individuals: (First $250,000 × 50%) + (Excess × 66.67%). For corporations and non-eligible trusts: Total gains × 66.67%. The threshold applies to net capital gains (after losses).

How do net capital losses work?

Net capital losses from prior years can be carried back 3 years or forward indefinitely. When offsetting gains at different inclusion rates, an adjustment factor is applied. Per the backgrounder, losses are effectively applied first to offset Tier 2 (higher rate) gains.

What is the Lifetime Capital Gains Exemption?

The LCGE allows you to exempt up to $1.25M (indexed) of capital gains on qualified farm/fishing property or qualified small business corporation shares. It is claimed as a deduction against taxable income, not against the capital gain itself.

What about the Canadian Entrepreneurs' Incentive?

The Canadian Entrepreneurs' Incentive is a separate proposed measure that provides a partial deduction on qualifying business dispositions. It is not covered by this calculator.

When does the change take effect?

The change was originally proposed for June 25, 2024, and then deferred to January 1, 2026. The government has not yet confirmed whether it will proceed.

Is the change definitely happening?

No. The deferral to January 1, 2026 was announced in January 2025, but the legislation was not passed. The current 50% rate applies until and unless the change is enacted.

Official sources: Department of Finance Backgrounder · CRA T4037 Capital Gains

⚠️This tool is for information purpose only. We do not guarantee any claim.
It is made based on data publicaly available on official website of concerned department.

Last Updated: March 2026 | Official Determination Required

📊 Comparison: Proposed 2026 vs Old 2025 Rules

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