Updated Checked by the Tax-Services.ca editorial team How we check
The capital gains tax rate in Canada isn’t a rate of its own. You add half the gain to your other earnings, and your usual brackets tax it, so the top federal rate on a gain ends up near 16.5% and the rest depends on your province and your other income.
How much of a gain is taxable?
Fifty percent. The CRA’s 2025 guidance has a worked case where the gain is halved and only that half lands on line 12700. The government announced on 21 March 2025 that it was cancelling the planned rise in the inclusion rate, so the two-thirds figure you may have read about never took effect. We found no separate 2026 statement on the half figure, so read the CRA page before a big sale.
The gain itself is what you sold for, minus what you paid, minus the costs of selling. Legal fees, agent fees and similar outlays count. Tax people call your purchase price the cost base, and it shifts when you buy more of the same holding later.
The gain belongs to the year you sell, not the year you bought or the year the money reached your bank. If a sale closes on 28 December, it’s on this year’s return.
What does the tax on a $95,000 gain look like?
Say you sell shares for $250,000 that cost $150,000, and you pay $5,000 in selling costs. The gain is $95,000 and $47,500 of it is taxable. How much tax you pay on that depends mostly on what else you earned that year.
| Other taxable income, Ontario | Extra tax on the gain | Share of the gain |
|---|---|---|
| $45,000 | $13,096 | 13.8% |
| $90,000 | $17,451 | 18.4% |
| $150,000 | $21,835 | 23.0% |
| $220,000 | $23,941 | 25.2% |
These come from our capital gains tax calculator. Move the same sale to Alberta with $90,000 of other income and the extra tax drops to $15,551, or 16.4%. Province matters, but your other income matters more.
Why does the same gain cost so different amounts?
Because the taxable half stacks on top of your salary. It fills the brackets above your income, one after another. Someone earning $45,000 has most of the gain taxed in the middle brackets. Someone at $150,000 pays the higher ones straight away.
Same gain, different bill.
That’s why timing helps. A gain you can spread over two years, or take in a lean earning year, often costs less. Check where your next dollar lands with the marginal tax rate calculator before you decide. Even a ballpark answer beats finding out in April.
What losses and exemptions can cut the bill?
A capital loss first cancels gains in the same year. If losses are larger, the CRA says you can generally apply net capital losses to the taxable gains of the three years before and to any year after. Finance Canada’s backgrounder on the capital gains inclusion rate puts it the same way: net capital losses may be carried back three years and forward indefinitely. That can mean a refund of tax you paid earlier.
A quick picture: sell one stock for a $10,000 gain and another for a $10,000 loss in the same year, and the two cancel. Neither half, $5,000 each, ends up taxed.
Your main home is usually exempt when you sell it, and you still report the sale. The home sale proceeds calculator shows what’s left after costs. The lifetime exemption for small business shares, plus farming and fishing property, was raised to $1,250,000, and our calculator can apply it if you tick the box for qualified shares or farm property and enter the amount you have left.
Growth held in a TFSA doesn’t get this treatment at all, which is why the TFSA calculator is worth a look before you buy.
Mistakes that raise the bill
- Forgetting selling costs, which cuts the gain you can report.
- Going by the price you remember, not your records of what you paid.
- Skipping the report on a sale that lost money, which throws away a loss you could use later.
- Treating the calculator figure as the whole bill. Old Age Security clawback and some benefits react to a bigger income too.
Our tool counts a loss as no tax and adds nothing for credits, so it gives you a fair estimate, not a filing.
How we checked the figures
The half-of-the-gain rule and the loss carry rules come from the CRA‘s guidance on line 12700 and on calculating capital gains for 2025, and the three-year carryback wording from the Finance Canada page linked above. The cancellation date and the exemption limit come from the Prime Minister’s announcement of 21 March 2025. Tax brackets are the 2026 federal and Ontario tables that we checked in September 2026. We’re an independent site, not part of any government.
Frequently asked questions
What is the capital gains tax rate in Canada?
There's no separate rate. Half the gain joins your other income and is taxed in your federal and provincial brackets.
Was the two-thirds inclusion rate ever applied?
No. The government announced on 21 March 2025 that it was cancelling the proposed increase.
Do I pay capital gains tax when I sell my home?
Usually not on your main home, though you still report the sale on your return.
Can I use a capital loss?
Yes. It first cancels gains in the same year. The CRA says net losses can generally be applied to the three years before and to any later year.
How do I work out the gain?
Start with the sale price, then subtract what you paid (the cost base) plus your selling expenses.
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