What rate is a trust taxed at in Canada for 2026, federally and by province?
For 2026, a Canadian trust pays federal tax at a flat 33%, the top individual rate, on every dollar of income it keeps. Provincial trust rates add 11.5% to 25.75%, for a combined 44.5% to 54.8% on ordinary income. Graduated rate estates and qualified disability trusts are the exceptions: they use the individual brackets, 14% to 33% federally.
What rate does a trust pay on income it keeps in 2026?
The top individual rate, 33% federally, on all of its taxable income. Section 122(1) taxes every trust other than a graduated rate estate (GRE) or a qualified disability trust (QDT) at the highest individual percentage for the year laws-lois.justice.gc.ca, and the CRA's T3 guide puts that at 33%
canada.ca. For 2026 the top federal bracket is still 33%, on income over $258,482 for an individual
canada.ca. A trust skips the brackets and starts at 33%.
| Trust | Federal rate on income it keeps, 2026 | Why |
|---|---|---|
| Family trust or any other inter vivos trust | 33% flat | s.122(1) |
| Spousal, alter ego or joint partner trust | 33% flat | s.122(1) |
| Testamentary trust that is not a GRE or QDT | 33% flat | s.122(1) |
| Graduated rate estate, first 36 months after death | 14% to 33%, individual brackets | Excluded from s.122(1) |
| Qualified disability trust | 14% to 33%, individual brackets | Excluded from s.122(1) |
| Income paid or payable to a beneficiary | The beneficiary's own rates | Deducted under s.104(6), taxed under s.104(13) |
Testamentary or inter vivos makes no difference to the rate any more. Only the two exclusions in 122(1) get brackets, and a GRE loses them on the 36th month after death.
The trust also loses almost every personal credit. Section 122(1.1) allows a trust only the donation credit (s.118.1), the minimum tax carryover (s.120.2) and the dividend tax credit (s.121) laws-lois.justice.gc.ca. There is no basic personal amount, so tax starts on the first dollar, and that rule covers a GRE and a QDT too.
What is the combined trust rate in each province?
Each province taxes a trust resident there on its own T3 provincial form, at the rate for the province where the trust lived on the last day of its tax year canada.ca. The latest forms are for 2025; the CRA hasn't published the 2026 versions yet. The federal 33% is the same in both years.
| Province or territory | Provincial rate on a trust, 2025 form | Combined with 33% federal | Top individual rate, 2026 |
|---|---|---|---|
| Newfoundland and Labrador | 21.8% | 54.8% | 21.8% |
| Nova Scotia | 21% | 54% | 21% |
| Ontario | 20.53% | 53.53% | 13.16% plus surtax |
| British Columbia | 20.5% | 53.5% | 20.5% |
| Quebec | 25.75% | 53.31% (after the 16.5% abatement) | 25.75% |
| New Brunswick | 19.5% | 52.5% | 19.5% |
| Prince Edward Island | 19% | 52% | 20% |
| Manitoba | 17.4% | 50.4% | 17.4% |
| Alberta | 15% | 48% | 15% |
| Yukon | 15% | 48% | 15% |
| Saskatchewan | 14.5% | 47.5% | 14.5% |
| Northwest Territories | 14.05% | 47.05% | 14.05% |
| Nunavut | 11.5% | 44.5% | 11.5% |
The provincial column comes from the line for trusts other than GREs and QDTs on each 2025 form: canada.ca,
canada.ca,
canada.ca,
canada.ca,
canada.ca,
canada.ca,
canada.ca,
canada.ca,
canada.ca,
canada.ca,
canada.ca and
canada.ca. The last column is the CRA's 2026 table for individuals
canada.ca.
Two rows need a note. Ontario charges a trust a flat 20.53% and applies the Ontario surtax only to GREs and QDTs canada.ca. The 20.53% works out to the 13.16% top rate grossed up by the 20% and 36% surtax rates (13.16% × 1.56). Prince Edward Island added a 20% bracket over $200,000 for 2026
canada.ca, so check the 2026 T3PE before you file at 19%.
Quebec trusts file a separate TP-646 with Revenu Québec, where a trust other than a GRE, QDT or mutual fund trust pays 25.75% of taxable income revenuquebec.ca. That is still the top Quebec rate for 2026, on income over $132,245 for an individual
revenuquebec.ca. On the federal side, the T3 guide says a trust may get an abatement of 16.5% of its basic federal tax
canada.ca, which brings 33% down to 27.555%.
What does $100,000 of interest cost in a trust, a GRE or a beneficiary's hands?
Worked example: a trust earns $100,000 of interest in 2026. Compare three outcomes at federal 2026 rates: the trust keeps it, a GRE keeps it, or the trust makes it payable to one adult beneficiary with no other income. The brackets are 14% up to $58,523 and 20.5% up to $117,045 canada.ca, and the basic personal amount is $16,452
canada.ca.
| Federal tax, 2026 | Trust keeps it | GRE keeps it | Paid to a beneficiary |
|---|---|---|---|
| First $58,523 | $19,312.59 (33%) | $8,193.22 (14%) | $8,193.22 (14%) |
| Next $41,477 | $13,687.41 (33%) | $8,502.79 (20.5%) | $8,502.79 (20.5%) |
| Tax before credits | $33,000.00 | $16,696.01 | $16,696.01 |
| Basic personal amount ($16,452 × 14%) | Not allowed | Not allowed | $2,303.28 |
| Federal tax | $33,000.00 | $16,696.01 | $14,392.73 |
In Ontario, add 20.53% for the trust: $20,530, for a total of $53,530 on $100,000 canada.ca. Making the income payable saves $18,607.27 federally before provincial tax, which is why most trusts allocate income every year.
The allocation counts only if the amount was paid in the year or the beneficiary could enforce payment in the year laws-lois.justice.gc.ca. Then the trust deducts it under 104(6) and the beneficiary includes it under 104(13). A trustee resolution after December 31 is too late for a calendar year trust. If the beneficiary is a family member and the income comes from a private company, check TOSI before counting on the beneficiary's rates; family trust tax works through a dividend allocation.
How do graduated rate estates and qualified disability trusts get individual rates?
Both are taxed on their taxable income at the federal rates for individuals canada.ca. A GRE is the estate itself, for up to 36 months after the death, once it designates itself on its first T3; the conditions and the 36 month clock are on graduated rate estate. After that the same estate pays 33% on whatever it keeps.
A QDT is a testamentary trust that arose on and as a consequence of a particular individual's death, is resident in Canada, and files a joint election with one or more beneficiaries, including each beneficiary's SIN laws-lois.justice.gc.ca. Each electing beneficiary must be named in the will or other instrument by the deceased, must qualify for the disability tax credit under 118.3(1)(a) to (b) for the year, and can elect with only one trust for that year
laws-lois.justice.gc.ca. A trust created during the settlor's lifetime, such as an inter vivos Henson trust, can't be a QDT.
| QDT event | Result |
|---|---|
| No beneficiary at year end was an electing beneficiary in an earlier year (usually after the last one dies) | Recovery tax |
| The trust stops being resident in Canada | Recovery tax |
| Capital goes to a beneficiary who is not an electing beneficiary | Recovery tax |
| Income paid out and deducted under 104(6)(b), or paid to satisfy a right to an amount deducted earlier | No recovery tax |
The recovery tax in 122(1)(c) and 122(2) claws back the saving: it recomputes the tax for every QDT year at the top rate and charges the difference, after reducing those years' income for amounts already distributed to electing beneficiaries laws-lois.justice.gc.ca. Provinces follow the same split. Every 2025 provincial and territorial T3 form carries its own recovery tax line, taken from line 43 of Form T3QDT-WS
canada.ca, and for 2025 Alberta added an 8% first bracket for GREs and QDTs only
canada.ca.
Does alternative minimum tax apply to a trust?
Yes, and harder than it does to an individual. The minimum amount is 20.5% of adjusted taxable income minus an exemption, but section 127.51 gives the exemption only to an individual other than a trust and to a QDT; for every other trust it's nil laws-lois.justice.gc.ca. For 2026 the QDT exemption is $181,440, the start of the 29% bracket
canada.ca.
| Trust | Minimum tax for years after 2023 | Exemption |
|---|---|---|
| Family trust and other inter vivos trusts | Applies | Nil |
| Testamentary trust after GRE status ends | Applies | Nil |
| Qualified disability trust | Applies | $181,440 for 2026 |
| Graduated rate estate | Exempt, s.127.55(f)(i) | Not needed |
| Spousal, alter ego or joint partner trust, year that includes the death | Exempt, s.127.55(e) | Not needed |
| Mutual fund trusts, RRSP, RRIF, TFSA and other registered plan trusts | Exempt, s.127.55(f)(i) | Not needed |
The GRE exemption is indirect: 127.55(f)(i) exempts the trusts listed in 150(1.2)(j), which is a graduated rate estate or an estate that would be one if it had designated itself laws-lois.justice.gc.ca
laws-lois.justice.gc.ca. The T3 guide confirms GREs are exempt for years after 2023 and that only a QDT can claim the basic exemption
canada.ca.
Worked example: a family trust sells shares for a $1,000,000 capital gain in 2026 and keeps all of it. Regular tax is 33% of the $500,000 taxable half laws-lois.justice.gc.ca: $165,000. For minimum tax the whole gain counts, so before any other adjustment the minimum amount is 20.5% of $1,000,000, or $205,000, with no exemption. The trust pays $40,000 more, recoverable only against future regular tax that exceeds minimum tax, for seven years. Making the gain payable to beneficiaries moves it out of the trust's calculation. The full mechanics are on alternative minimum tax, and the 21 year rule deemed disposition is where trusts most often meet it.
Sources
Does a trust get the basic personal amount?
No. Section 122(1.1) limits every trust, including a GRE and a QDT, to the donation credit, the minimum tax carryover and the dividend tax credit laws-lois.justice.gc.ca. Tax starts on the first dollar of taxable income.
Is a capital gain the trust keeps taxed at 33%?
Only the taxable half. Under 38(a) a taxable capital gain is one half of the gain laws-lois.justice.gc.ca, so the federal cost is 16.5% of the whole gain, before minimum tax, which can lift it to 20.5% for a trust with no exemption
laws-lois.justice.gc.ca.
Which province's rate applies to a trust?
The province or territory where the trust was resident on the last day of its tax year canada.ca. If the trust carries on business through a permanent establishment in another province, it splits that income by province on Form T3MJ, and a Quebec resident trust calculates its provincial tax on the TP-646 instead.
Does a trust have to pay instalments?
Since 2016 only a GRE is exempt from the instalment rules, but the T3 guide says the CRA will continue not to assess penalties or interest when a trust doesn't make enough instalment payments canada.ca. The balance is still due 90 days after year end; see T3 filing deadline.
General information for the tax year shown, not advice for a specific client. Confirm the facts before you file or remit.