Updated Checked by the Tax-Services.ca editorial team How we check
Federal corporate tax rates in Canada are simple to state. Most corporations pay 15%. A Canadian-controlled private corporation pays a net 9% on its first $500,000 of active business income, thanks to the small business deduction. Provinces add their own tax on top, so the combined rate on a general corporation lands between roughly 23% and 30%.
How is the federal rate built?
The CRA starts with a basic federal rate of 38%. A 10 point federal abatement takes it to 28%, and the general rate reduction brings it down to 15%. The small business deduction cuts it further, to 9%. The abatement exists because provinces tax corporations too, which is why you pay both a federal and a provincial bill.
For Canadian-controlled private corporations claiming the small business deduction, the net tax rate is 9%.
Corporation tax rates, Canada Revenue Agency, canada.ca
Only a CCPC can use the lower rate. A subsidiary of a foreign company, or a public corporation, pays 15% on everything.
What is the small business limit?
The federal limit is $500,000 of active business income a year. Two things can shrink it. Associated corporations share one limit, so owning three companies doesn’t give you three. And the limit is reduced when a corporation’s taxable capital falls between $10 million and $50 million, and when its passive investment income runs from $50,000 to $150,000. Above those ranges the deduction is gone. If your company holds a lot of investments inside it, check this before you count on 9%.
Some provinces set a different limit for their own rate. The CRA lists $600,000 for Saskatchewan and Prince Edward Island and $700,000 for Nova Scotia.
What do provinces add to federal corporate tax rates?
Provincial rates run from 0% to 3.2% on small business income and from 11.5% to 15% on the rest, according to the CRA. Quebec and Alberta collect their own corporate tax. The table shows what our corporate tax calculator uses for a calendar 2026 year, with the federal part included.
| Province | Small business combined | General combined |
|---|---|---|
| Ontario | 11.7% (blend, see below) | 26.5% |
| Quebec | 12.2% | 26.5% |
| British Columbia | 11.0% | 27.0% |
| Alberta | 11.0% | 23.0% |
| Saskatchewan | 10.0% | 27.0% |
| Manitoba | 9.0% | 27.0% |
| Nova Scotia | 10.5% | 29.0% |
| Newfoundland and Labrador | 11.0% | 30.0% |
Ontario is the awkward one. It cut its small business rate from 3.2% to 2.2% on July 1, 2026. A corporation with a December year end straddles that date, so the calculator blends the two by days, which is our own arithmetic and not a published rate. A corporation with a different year end gets a different blend. Quebec’s cut to 2.2% applies to years beginning after April 29, 2026, so a calendar 2026 company stays at 3.2%. Revenu Québec’s own pages wouldn’t open for us, so check them.
What does that look like in dollars?
Take an Ontario CCPC with $800,000 of active business income in 2026. Federal tax is $90,000, which is $45,000 on the first $500,000 plus $45,000 on the last $300,000. Ontario tax is about $47,980. The total is $137,980, an average of 17.25%. The same $300,000 slice pays 26.5% once it passes the limit, so the marginal rate jumps.
Compare a corporation that isn’t a CCPC with $300,000 in Ontario. There’s no small business deduction, so it pays $45,000 federal and $34,500 provincial, $79,500 in all. That’s only the corporation’s tax, and you’d feel the rest when the money comes out. Paying yourself triggers more tax, and you can test that with the dividend tax calculator and the income tax calculator.
A smaller one for scale. A CCPC in Alberta earns $200,000 of active business income. Using the table’s 11.0% combined rate, the corporate tax is $22,000, which is $18,000 federal at 9% plus $4,000 provincial. A company without the small business deduction in the same spot pays 23.0%, so $46,000. That is $24,000 a year of tax the taxman never sees, thanks to the deduction, and it’s why people fuss over who qualifies.
Where do people get it wrong?
Quoting 15% for a small company is the classic one, and so is quoting 9% for all of the income. Others miss that the limit is shared, forget that passive income can shrink it, or treat the provincial rate as the whole story. Our calculator ignores the taxable capital reduction and credits, has optional boxes for passive income and associated companies, and it doesn’t model Quebec’s paid hours condition for the full reduction. So use it as a first estimate.
Salary is the other lever, since wages paid to you reduce the company’s income. The payroll remittance calculator shows what an employer adds on top of pay. More tools sit on the business tax hub.
One more thing about timing: these are rates for a calendar 2026 year. A company with a June year end can sit across two sets of rates in a single fiscal year, which is the same blending problem Ontario shows above. Ask your accountant which rates your own year end picks up.
Sources, and how we checked them
Federal rates, the abatement and the small business deduction come from the CRA‘s corporation tax rates page and the T2 return guide, read in September 2026. The provincial figures in the table come from our 2026 data file, checked against CRA and provincial pages where we could open them, and they’re for calendar 2026. We aren’t a government service and we don’t speak for one.
Frequently asked questions
What is the federal corporate tax rate in Canada?
It is 15% for most corporations after the abatement and the general rate reduction. A CCPC using the small business deduction pays a net 9% on its first $500,000.
Who qualifies for the small business rate?
Only a Canadian-controlled private corporation. The limit is shared among associated corporations and can shrink with high taxable capital or passive income.
Do provinces charge corporate tax on top of the federal rate?
Yes. Provincial rates run from 0% to 3.2% on small business income and 11.5% to 15% on other income, according to the CRA.
Why does Ontario show a blended small business rate for 2026?
Ontario cut its rate from 3.2% to 2.2% on July 1, 2026, so a calendar year straddles the change. The blend is our own calculation, not a published rate.
Does the calculator cover every corporation?
No. It ignores taxable capital and passive income reductions, associated corporations and credits.
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