Corporate tax rates in Canada
The federal and provincial corporate income tax rates for 2026, for small businesses and everyone else, with a calculator that works out the tax on your corporation's income.
- Federal small business rate
- 9%
- Federal general rate
- 15%
- Federal tax
- $22,500
- Provincial or territorial tax
- $5,500
- Total corporate tax
- $28,000
- Effective rate
- 11.2%
For a Canadian-controlled private corporation claiming the full small business deduction. An estimate, not tax advice: investment income, associated corporations and provincial credits change the answer.
Combined federal and provincial rates
For a Canadian-controlled private corporation. The small business rate applies to active business income up to the limit; the general rate applies above it, and to other corporations. Each combined rate is the federal rate plus the provincial or territorial one, shown in brackets.
| Province or territory | Small business | General | Limit |
|---|---|---|---|
| Alberta | 11% (2%) | 23% (8%) | $500,000 |
| British Columbia | 11% (2%) | 27% (12%) | $500,000 |
| Manitoba | 9% (0%) | 27% (12%) | $500,000 |
| New Brunswick | 11.5% (2.5%) | 29% (14%) | $500,000 |
| Newfoundland and Labrador | 11% (2%) | 30% (15%) | $500,000 |
| Northwest Territories | 11% (2%) | 26.5% (11.5%) | $500,000 |
| Nova Scotia | 10.5% (1.5%) | 29% (14%) | $700,000 |
| Nunavut | 12% (3%) | 27% (12%) | $500,000 |
| Ontario | 11.2% (2.2%) | 26.5% (11.5%) | $500,000 |
| Prince Edward Island | 10% (1%) | 30% (15%) | $600,000 |
| Quebec | 11.2% (2.2%) | 26.5% (11.5%) | $500,000 |
| Saskatchewan | 10% (1%) | 27% (12%) | $600,000 |
| Yukon | 9% (0%) | 27% (12%) | $500,000 |
- Ontario cut its small business rate from 3.2% to 2.2% effective July 1, 2026. A tax year that straddles the date blends the two rates by the days on each side.
- Quebec cut its small business rate from 3.2% to 2.2% for tax years beginning after April 29, 2026. Quebec's small business deduction generally needs at least 5,500 paid employee hours in the year.
- Newfoundland and Labrador's small business rate falls to 1.5% on January 1, 2027.
- Saskatchewan and Prince Edward Island set their limit at $600,000 and Nova Scotia at $700,000. Income between $500,000 and those limits pays the federal general rate but the provincial small business rate.
How corporate tax works for a small business
Every corporation pays federal tax, and a provincial or territorial tax where it has a permanent establishment. The headline federal rate is 38%, brought down to 28% by the provincial abatement, and to 15% by the general rate reduction.
A Canadian-controlled private corporation also gets the small business deduction on its first $500,000 of active business income, which brings the federal rate to 9%. Every province and territory has a matching lower rate.
Passive investment income is taxed differently: at a higher rate, part of which is refunded when the corporation pays taxable dividends. Income from a personal services business pays a federal rate of 33%.
What the corporation keeps after tax is only half the picture; paying it out to you is the other. See salary vs dividends and capital cost allowance for the two decisions that move a small corporation's tax the most.
Questions
- What is the corporate tax rate in Canada?
- It depends on the corporation and the province. A Canadian-controlled private corporation pays 9% federally on its first $500,000 of active business income, plus the provincial small business rate. Above that, and for other corporations, the federal rate is 15% plus the provincial general rate. Combined, that is 9% to 12% for small business income and 23% to 30% on the rest.
- What is the small business tax rate in Ontario?
- 11.2% combined: 9% federal plus 2.2% Ontario, on the first $500,000 of active business income. Ontario cut its small business rate from 3.2% to 2.2% effective July 1, 2026; a tax year that straddles that date blends the two. Above the limit the combined rate is 26.5%.
- How much tax does a small corporation pay on $100,000?
- In Ontario, a Canadian-controlled private corporation with $100,000 of active business income pays about $11,200: $9,000 federal and $2,200 provincial. The calculator above does it for every province.
- Who qualifies for the small business deduction?
- A Canadian-controlled private corporation, on active business income earned in Canada, up to the business limit. The limit is shared between associated corporations, and it shrinks when the corporation and its associates earn more than $50,000 of passive investment income in the previous year or carry more than $10 million of taxable capital.
- When is the corporate tax return due?
- A T2 return is due six months after the end of the corporation's tax year. Any balance owing is generally due two months after the year end, or three months for many Canadian-controlled private corporations that claim the small business deduction.
Filing and payment dates are on small business tax deadlines. Rates as legislated or announced by the federal, provincial and territorial governments, as of October 24, 2026. General information, not tax advice.
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