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Corporate income tax rates in Canada come in two layers. Federally, a Canadian-controlled private corporation (CCPC) pays 9% on its first $500,000 of small business income, and every other dollar of business income is taxed at 15%. Provinces then add their own rate on top, which is why two companies with the same profit can pay quite different bills.
What is the federal corporate income tax rate?
The CRA’s basic federal rate is 38%. After the federal abatement it drops to 28%, and after a further reduction the general rate lands at 15%. A CCPC that qualifies for the small business deduction pays 9% on income up to the business limit instead.
The federal limit is $500,000, but provinces set their own limits for their own rate. Some are higher, and that matters more than it sounds. According to the CRA’s corporation tax rates page, Saskatchewan and Prince Edward Island use $600,000, and Nova Scotia uses $700,000.
How do provincial rates compare?
This table adds the federal and provincial rates together, using the lower and higher provincial rates on that CRA page. The small business column applies to the first $500,000, the federal limit; provinces with a higher limit charge their low rate on more income than that. Quebec and Alberta run their own corporate tax systems and aren’t covered by the CRA’s table, so check their rates on the provincial sites.
| Province | Small business, combined | General, combined |
|---|---|---|
| Ontario (from 2027) | 11.2% | 26.5% |
| British Columbia | 11% | 27% |
| Manitoba | 9% | 27% |
| Nova Scotia (limit $700,000) | 10.5% | 29% |
| Saskatchewan (limit $600,000) | 10% | 27% |
| Prince Edward Island (limit $600,000) | 10% | 30% |
Ontario is the one that moves this year. The province cut its small business rate from 3.2% to 2.2% on July 1, 2026, which means the combined small business rate falls, because the federal 9% doesn’t change. A corporation with a calendar year gets a blend of the old and new rate. Our calculator prorates it by days and lands near 2.70% provincially, roughly 11.7% combined. That blend is derived, and neither the CRA nor the province publishes it, so read it as an estimate. Manitoba’s 9% looks odd, but it’s right: the province charges nothing on small business income.
What does a real bill look like?
Take an Ontario CCPC with $700,000 of active business income for a calendar 2026 year. The corporate tax calculator gives $75,000 federal and $36,480 for Ontario, so $111,480 in all. That’s 15.9% on the whole amount, even though the first $500,000 is taxed at about 11.7%.
The same $700,000 without small business status would come to $185,500 at 26.5%. The $74,020 gap is what the small business deduction is worth here. It also shows why the limit deserves attention when a company is growing.
Which limits and rules can raise your rate?
Three rules catch small companies. First, associated corporations share one $500,000 limit, so a group of related companies doesn’t multiply it. Second, the limit shrinks for corporations with large taxable capital, on a straight line between $10 million and $50 million. Third, it also shrinks when a company earns a lot of passive investment income, starting at $50,000 and reaching nil at $150,000.
Only CCPCs can use the small business rate. A company controlled by a non-resident or a public corporation pays the general rate. And the rate you pay on income isn’t what ends up with you. If you take profit out as a dividend, there’s a second layer, which the dividend tax calculator works out. Compare that with paying yourself a salary using the self-employed tax calculator, keeping in mind that its deductions reduce income tax but not CPP.
Common mistakes with corporate rates
You’ll often see the 9% federal rate quoted as the total rate. It isn’t. Add the province. People also assume the small business rate applies to all income, when it stops at the limit. And they use last year’s provincial rate, which is how Ontario’s July change gets missed.
Payroll is a separate cost. If the corporation pays you or staff, remittances follow their own schedule, covered by the payroll remittance calculator.
How do you work out your own rate with split limits?
Remember that the federal and provincial limits are separate. A ballpark for a Nova Scotia CCPC with $800,000 of profit goes in three slices. The first $500,000 pays 9% federal plus 1.5% provincial, 10.5%, so $52,500. The next $200,000 is above the federal limit but under Nova Scotia’s $700,000, so it pays 15% plus 1.5%, 16.5%, or $33,000. The last $100,000 pays the full 29%, or $29,000. That’s $114,500 in all, roughly 14.3% overall. Work yours out the same way and compare it with the calculator before you rely on either.
Where we got these figures
Federal rates and the provincial lower and higher rates come from the Canada Revenue Agency‘s corporation tax rates page, read in October 2026, along with its Ontario page and its list of what’s new for corporations. The July 2026 Ontario cut comes from budget summaries by accounting firms. Combined rates are our addition. We aren’t a government service and we don’t speak for one.
Frequently asked questions
What is the corporate tax rate in Canada?
Federally it is 15% for the general rate and 9% for a CCPC on income up to the small business limit. Provincial tax comes on top.
What is the small business limit?
The federal limit is $500,000. Some provinces use a different limit for their own rate, such as $600,000 in Saskatchewan and $700,000 in Nova Scotia.
Did Ontario change its corporate rate in 2026?
Yes. The small business rate went from 3.2% to 2.2% on July 1, 2026. The blended rate for a calendar year is our estimate and is not published.
Who can use the small business rate?
Only Canadian-controlled private corporations. Associated companies share one limit.
Are dividends part of these rates?
No. The rates cover the corporation's tax. Dividends you receive are taxed again in your own return.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST