Quick answer: Canadian-controlled private corporations (CCPCs) qualify for the small business deduction on the first $500,000 of active business income. The combined federal + provincial small business rate ranges from 9% (Manitoba, Yukon) to 12.2% (Ontario, Quebec) in 2026.
What this means: Above the $500,000 federal business limit, the combined corporate rate jumps to 23%-31% depending on province. Saskatchewan extends its 1% provincial rate to $600,000 of income.
What to do next: Enter active business income and your province below.
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What the calculator computes
This calculator estimates federal + provincial corporate tax for a CCPC on its active business income. It applies the small business rate up to the $500,000 federal business limit and the general rate on any income above that.
Federal small business rate (2026): 9% on the first $500,000 of active income (statutory, confirmed for 2026).
Federal general rate: 15% on income above the SBD limit.
Provincial small business rates: Range from 0% (Manitoba, Yukon) to 3.2% (Ontario, Quebec) for 2026, applied alongside the federal SBD.
Provincial general rates: 8% (Alberta) to 16% (PEI) on income above the SBD limit.
What the calculator does not model
Passive investment income SBD grind. The SBD is reduced when a CCPC has more than $50,000 of passive investment income, and fully eliminated at $150,000. The calc assumes zero passive income.
Associated corporations. The $500K business limit must be allocated among associated corporations — the calc treats each as if it had the full limit.
Capital gains, eligible vs non-eligible dividends, refundable taxes. Investment income is taxed separately and isn’t modeled here.
Ontario’s mid-2026 rate change. Ontario’s small business rate drops from 3.2% to 2.2% effective July 1, 2026. The calc uses the pre-July rate; a calendar-year CCPC sees a blended ~2.7% effective rate.
Methodology and sources
Federal rates from CRA Corporation tax rates. Provincial rates from each jurisdiction’s 2026 budget or current published rate. The federal small business deduction is in section 125 of the Income Tax Act.
Frequently asked questions
What is the federal small business tax rate for 2026?
9% on the first $500,000 of active business income for a CCPC. This rate is statutory and confirmed for 2026.
What is the small business deduction (SBD)?
A federal tax credit that reduces a CCPC's federal corporate tax rate from 15% to 9% on the first $500,000 of active business income. Most provinces apply a similar two-tier structure.
What is the business limit?
$500,000 federally — the income amount eligible for the small business rate. Saskatchewan uses a higher provincial limit of $600,000. The federal limit is reduced when a CCPC's taxable capital exceeds $10 million.
What happens if income exceeds $500,000?
Income above the limit is taxed at the combined federal + provincial general rate, typically 23%-31%.
Does Saskatchewan really have a $600,000 business limit?
Yes, but only provincially. The federal 9% rate still steps up at $500,000, so Saskatchewan CCPCs see a step at $500K (federal) and $600K (provincial).
Are 2026 provincial rates final?
The federal 9% small business rate is confirmed. Provincial rates as published in budget documents are accurate as of the calculator's last verified date — but provinces can amend rates mid-year (Ontario announced a July 1, 2026 change).
Methodology
CCPC small business rate: 9% federal + provincial rate on active income up to $500,000 SBD limit. Passive income grind: SBD limit reduced $5 per $1 of passive income above $50,000 (eliminated at $150,000). General rate ~26.5% Ontario above SBD limit. ITA s.125.