Corporate tax by province 2026: 23% to 30% general, 9% to 12.2% SBD

What is the combined corporate tax rate in each province for 2026?

Each combined rate is the federal net rate plus the provincial or territorial rate on the same income: 9% federal on small business income and 15% federal on general rate income canada.ca. The table assumes all taxable income is earned in one jurisdiction and the CCPC has its full business limit.

The CRA rate table is dated May 30, 2025, so as of October 2026 it still shows Ontario at 3.2% and Newfoundland and Labrador at 2.5% canada.ca. The CRA's what's new page carries both 2026 cuts: Ontario's lower rate drops to 2.2% from July 1, 2026, and Newfoundland and Labrador's drops to 2%, retroactive to January 1, 2026 canada.ca. Prince Edward Island's 15% general rate and $600,000 limit have applied since July 1, 2025, and Nova Scotia's 1.5% rate and $700,000 limit since April 1, 2025 canada.ca.

Alberta and Quebec don't have collection agreements with the CRA, so they set and collect their own corporate tax and your client files a separate provincial return. Alberta's rates are 8% general and 2% small business on a $500,000 limit, unchanged since July 1, 2020 alberta.ca. Quebec's general rate is 11.5% revenuquebec.ca. Each province has more detail on its own page: Ontario, Alberta and British Columbia.

How do the federal 15% and 9% stack with each provincial rate?

Federal Part I tax starts at 38%. The 10% abatement for income earned in a province takes it to 28%, and the 13% general rate reduction leaves 15% on general rate income canada.ca. A CCPC's income eligible for the small business deduction gets a 19% deduction instead (ITA 125(1.1)), for a net 9% on the first $500,000 laws-lois.justice.gc.ca. The two reductions don't stack, because ITA 123.4 takes small business income out of full rate taxable income before the 13% applies laws-lois.justice.gc.ca. Income from a personal services business gets neither reduction and pays 33% federally, before the provincial general rate.

Investment income is where the gap between provinces widens. ITA 123.4 also strips a CCPC's aggregate investment income out of full rate taxable income, so it gets no general rate reduction, and ITA 123.3 adds a refundable 10 2/3% laws-lois.justice.gc.ca. That's 38% less 10% plus 10.67%, or 38.67% federal. The province then applies its higher rate, since investment income isn't eligible for the lower rate canada.ca.

Of the federal 38.67%, 30.67 points are refundable through RDTOH when the corporation pays taxable dividends, which leaves 8% federal plus the provincial rate as permanent tax. The provincial part is never refunded. How the refund works is on our RDTOH page.

Which rates changed partway through 2026, and what rate does your client get?

Three jurisdictions cut their small business rate for 2026, each on a different timing. Ontario's 2.2% applies from July 1, 2026 ontario.ca, and when a rate changes during a taxation year the CRA has you weight each rate by the days it was in effect canada.ca. Newfoundland and Labrador's 2% runs from January 1, 2026, falling to 1.5% on January 1, 2027 and 1% on January 1, 2028 gov.nl.ca.

Quebec doesn't prorate. Its small business deduction rises from 8.3% to 9.3% for taxation years beginning after April 29, 2026, which takes the rate on eligible income from 3.2% to 2.2% revenuquebec.ca. A calendar 2026 year stays at 3.2% all year.

Add 9% federal to get the combined rate: a calendar 2026 Ontario CCPC pays a blended 11.70% on its first $500,000, a calendar 2026 Quebec CCPC pays 12.2%, and the same corporation in Newfoundland and Labrador pays 11%. The day split behind the Ontario figure is worked through line by line on our Ontario corporate tax rate page.

Quebec's other conditions still apply, including the linear reduction of the deduction rate based on remunerated hours and the share of primary and manufacturing activities revenuquebec.ca. A Quebec CCPC with few paid hours can get less than the full 9.3%.

Worked example: $700,000 costs $85,500 in Nova Scotia and $111,479.45 in Ontario

Take a CCPC with a December 31, 2026 year end, $700,000 of active business income, no associated corporations, taxable capital under $10 million and adjusted aggregate investment income of $50,000 or less. The federal limit is $500,000 everywhere. What changes is the provincial limit and the provincial rates.

The 16% and 16.5% bands are the trap. Nova Scotia's lower rate applies up to its own $700,000 limit canada.ca and Saskatchewan's up to $600,000 canada.ca, but the federal small business deduction stops at $500,000 (ITA 125(2)) laws-lois.justice.gc.ca. So income in the band pays the federal 15% plus the provincial lower rate, not the combined small business rate from the table.

The Ontario figure uses the day split for 2026: $45,000 federal plus Ontario tax of $57,500 less a deduction of $44,020.55 on the first $500,000. A year starting on or after July 1, 2026 drops that line to $56,000 (11.2%), and the total to $109,000.

Why the passive income grind costs less in Ontario and New Brunswick

Federally, ITA 125(5.1) reduces the $500,000 limit by the greater of the taxable capital grind and the passive income grind, which cuts the limit by $5 for every $1 of adjusted aggregate investment income over $50,000 laws-lois.justice.gc.ca. Ontario doesn't follow the passive income grind ontario.ca, and New Brunswick's limit isn't subject to it either canada.ca.

Take a CCPC with $500,000 of active business income and $100,000 of AAII in its 2025 taxation year. Its federal limit falls to $250,000, so $250,000 moves from 9% to 15% federally, an extra $15,000. In Ontario or New Brunswick, the whole $500,000 still gets the provincial lower rate. Quebec does grind its limit on adjusted aggregate investment income between $50,000 and $150,000, and on paid up capital between $10 million and $50 million revenuquebec.ca.

The AAII rules, the formula and the planning around it are on our passive income grind page, and how associated corporations share one limit is covered under associated corporations.