Canadian Corporation Tax Rates by Province (2026)

Understanding corporate tax rates is essential for every Canadian business owner. The rates you pay depend on three things: whether you qualify for the small business deduction, which province your corporation operates in, and how much active business income you earn.

The tables cover ordinary active business income in 2026. Investment income, personal services businesses and special sector rates require separate treatment.

Federal Corporate Tax Rates

For ordinary active business income eligible for the relevant deductions, the two main federal rates are:

The small business deduction (SBD) reduces the federal rate from 15% to 9% on the first $500,000 of active business income. The corporation must be a Canadian-Controlled Private Corporation (CCPC) throughout the year, and the deduction is limited by qualifying Canadian active business income, adjusted taxable income and the available business limit. The $500,000 limit starts to shrink once your associated group's taxable capital employed in Canada passes $10 million, and it is gone at $50 million (ITA s. 125(5.1)). See the CRA's current corporate tax rates for the authoritative source.

Provincial and Territorial Corporate Tax Rates

Each province adds its own corporate tax rate on top of the federal rate. At the newest 2026 rates, small business rates (combined federal + provincial) vary from 9% in Manitoba and Yukon to 12% in Nunavut. Newfoundland and Labrador, Ontario and Quebec each cut their small business rate during 2026, on different dates, so check the table below for the date that applies to your tax year.

Manitoba

9%

Yukon

9%

Sask.

10%

PEI

10%

Nova Scotia

10.5%

Alberta

11%

BC

11%

NL

11%

NWT

11%

Ontario

11.2%

Quebec

11.2%

NB

11.5%

Nunavut

12%

General corporate rates (for ordinary income outside the available SBD) show a wider spread, from 23% in Alberta to 30% in Newfoundland and Labrador and PEI.

Alberta

23%

NWT

26.5%

Ontario

26.5%

Quebec

26.5%

BC

27%

Manitoba

27%

Nunavut

27%

Sask.

27%

Yukon

27%

NB

29%

Nova Scotia

29%

NL

30%

PEI

30%

The raw table, for reference:

Note: Three provinces apply their small business rate to more than the federal $500,000: Saskatchewan and Prince Edward Island to $600,000, and Nova Scotia to $700,000. Above $500,000 the federal rate is already 15%, so that extra slice is taxed at 16% combined in Saskatchewan and PEI and 16.5% in Nova Scotia. Manitoba's and Yukon's provincial small business rates are 0%, making theirs the lowest combined rate in Canada.

A few 2026 details the table compresses:

• Ontario cut its small business rate from 3.2% to 2.2% on July 1, 2026, and a tax year that straddles that date is weighted by days. A corporation with a December 31 year end pays about 2.70% Ontario tax on its small business income for 2026 (11.70% combined), then 2.2% from 2027. See Ontario corporate tax rates.
• Quebec announced on April 29, 2026 (Finances Québec information bulletin 2026-3) that it is cutting its rate from 3.2% to 2.2% for tax years that begin after that day, with no proration, so a calendar-year corporation keeps 3.2% for all of 2026. Quebec's small business rate also requires at least 5,500 paid hours in the year, or 5,500 across the corporation and its associated corporations in the previous year (it phases out between 5,500 and 5,000 hours), or an alternative primary/manufacturing activity test may apply: more than 25% gives access to a partial deduction, while at least 50% is needed for the full deduction under that test. The hours and activity rules therefore do not give every qualifying corporation the minimum rate. A one-person service corporation in Quebec usually pays Quebec's 11.5% general rate, 20.5% combined, even on its first $500,000.
• Newfoundland and Labrador cut its rate to 2% retroactive to January 1, 2026, and has announced further cuts to 1.5% on January 1, 2027 and 1% on January 1, 2028.

The table combines the CRA rate table with its current corporation updates, Alberta rates, Ontario guidance and Revenu Québec's 2026 update. Québec's information bulletin 2026-3 explains the effective date, hours test and activity-percentage phase-in. These newer updates matter because an aggregate rate table can lag a midyear change.

What Qualifies as Small Business Income?

Not all corporate income qualifies for the small business deduction. The SBD only applies to active business income earned by a CCPC.

Investment income earned inside a corporation is taxed at a higher rate (roughly 50% combined) and is subject to additional rules through the Refundable Dividend Tax on Hand (RDTOH) system.

The $500,000 Business Limit

The federal small business limit is $500,000, but it can be reduced in three situations:

1. Associated corporations. Corporations that meet the statutory association tests share the $500,000 limit; owning a minority interest in several companies does not automatically associate them.
2. Taxable capital over $10 million. The business limit is gradually reduced to zero as taxable capital employed in Canada grows from $10 million to $50 million.
3. Passive investment income. If your corporation and its associated corporations had more than $50,000 of adjusted aggregate investment income for tax years ending in the previous calendar year, the business limit is reduced by $5 for every $1 of investment income above $50,000. At $150,000 of investment income, the business limit is eliminated entirely.

Apply the larger of the taxable-capital and passive-income reductions rather than subtracting both. A short corporate tax year can also prorate the limit. See small business deduction for the ordering and exceptions.

How Tax Integration Works

Canada's tax system is designed so that income earned through a corporation and then distributed as dividends is taxed at roughly the same total rate as income earned personally. This is the concept of integration. The CRA publishes both eligible dividend and non-eligible dividend gross-up and credit rates each year in its T5 reporting guide.

Here's a simplified example for a BC resident earning $100 of active business income in 2026, whose other income puts them between $117,045 and $140,430 of taxable income, where ordinary income is taxed at 38.29% (26% federal plus 12.29% BC). Income taxed at the small business rate is paid out as a non-eligible dividend: the $89 left after corporate tax is grossed up by 15% to $102.35, then offset by the federal credit (9/13 of the gross-up) and the BC credit (1.96% of the grossed-up dividend). The BC credit table gives that rate.

The dividend calculation is $102.35 × (38.29% − 9.0301% − 1.96%) = $27.94145, rounded to $27.94. It assumes the entire increment remains within the stated bands and does not change any other credit or benefit. The rates are close but not identical. Perfect integration is a theoretical goal. In practice, small differences exist depending on the province, income level, and type of dividend (eligible vs. non-eligible).

Planning Considerations

Retain earnings when you can. If you don't need all the corporate income personally, leaving it in the corporation at 11% (BC small business rate) instead of withdrawing it at your personal marginal rate (potentially 53.5% at the top bracket) creates a significant tax deferral.

Watch the passive income threshold. If the associated group's adjusted aggregate investment income exceeds $50,000 in the relevant prior-calendar-year period, the federal business limit starts shrinking; not every accounting investment gain enters that measure. This creates a planning challenge for corporations with large retained earnings.

Provincial allocation matters. If your corporation earns income in multiple provinces, the income is allocated to each province based on where you have a permanent establishment and where your employees/revenue are. Different provincial rates mean the allocation can meaningfully affect your total tax bill.

How Ledg helps

Ledg tracks your corporate income and expenses throughout the year, giving you organized book records to reconcile to taxable income, which still requires tax adjustments. When it's time to plan your salary-dividend mix or estimate your tax bill, your numbers are already organized and ready to share with your accountant.