The capital gains inclusion rate determines what portion of a capital gain is added to taxable income. For 2026, individuals pay tax on 50% of the first $250,000 of capital gains in a year, and 66.67% (two-thirds) on amounts above $250,000. Most corporations and trusts use the 66.67% rate on all capital gains.
How it works
Taxable capital gain = capital gain × inclusion rate. The taxable amount is added to other income and taxed at the marginal rate. A $10,000 gain at 50% inclusion produces $5,000 of taxable income; at a 30% combined marginal rate, tax is $1,500.
2026 individual rates
| Annual personal capital gains | Inclusion rate |
|---|---|
| First $250,000 | 50% |
| Above $250,000 | 66.67% |
What triggers a capital gain
A disposition: selling, deemed selling (death, emigration, change of use), or gifting capital property. Common triggers: selling investments in non-registered accounts, selling a rental property, selling private company shares, and emigration from Canada.
Principal residence exemption
Gains on a principal residence are exempt from capital gains tax for years the property qualifies. Sales must be reported on Schedule 3 even when no tax is owed.