Tax Planning
Planning Ahead for Capital Gains Changes Coming in 2026
A significant shift is coming to how capital gains are taxed in Canada, especially for gains over $250,000—planning now can save you from a higher inclusion rate.
By NomadicTax Research Team • 5-8 min read • March 16, 2026
## Overview of the proposed changes
Starting **January 1, 2026**, Canada is proposing to increase the **capital gains inclusion rate** from **one-half (50%) to two-thirds (≈66.67%)** for:
- Individuals on gains realized in **excess of $250,000 annually**
- **All gains** realized by corporations and most trusts 🏢 ([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/update-cra-administration-proposed-capital-gains-taxation-changes.html?utm_source=openai))
Additionally, the **Lifetime Capital Gains Exemption (LCGE)** is expected to increase from **$1,016,836 to $1,250,000**. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income/whats-new-small-businesses-self-employed.html?utm_source=openai))
## What this means in practical terms
| Scenario | Before Jan 1, 2026 | Proposed After Jan 1, 2026 |
|---|---|---|
| Individual with $300,000 capital gain | $300,000 × 50% taxed = $150,000 taxable gain | First $250,000 @ 50%, excess $50,000 @ 66.67% → $150,000 + $33,333 = **$183,333** taxable gain |
| Corporation with $500,000 capital gain | 50% inclusion = $250,000 taxable gain | Entire gain at 66.67% inclusion = **$333,333** taxable gain |
## Actionable tax planning strategies
- **Accelerate realized gains**: If you anticipate sizable gains, consider realizing them *before* January 1, 2026, when the inclusion rate is still 50%.
- **Use LCGE smartly**: To the extent possible, structure dispositions to leverage the LCGE before it’s potentially diluted by higher inclusion rates.
- **Consider corporate vs individual ownership**: If operating through a corporation or trust, be aware those entities will lose advantage under the higher inclusion rule.
- **Offset gains with losses**: Harvesting capital losses before year end becomes more important when inclusion rates rise.
## Key caveats and compliance notes
- The proposal is **not yet law**; legislation is expected to be introduced in Parliament. ([canada.ca](https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income/whats-new-small-businesses-self-employed.html?utm_source=openai))
- Until the effective date, continue using the **50% inclusion rate** for capital gains. CRA has confirmed administration will stay unchanged **until January 1, 2026**. ([canada.ca](https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/update-cra-administration-proposed-capital-gains-taxation-changes.html?utm_source=openai))
- Tax software and CRA forms may not immediately reflect changes. Always confirm you’re using up-to-date tools and updated NWMM (Notice of Ways and Means Motion) where applicable.
## Summary
This is a high-impact shift. If you expect large capital gains in 2026 or later, proactive planning—accelerating gains, using exemption limits, and offsetting losses—can make a large difference. Keep close watch for the formal legislative text, and plan now so you’re not caught off guard.