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Prince Edward Island taxes taxable income above $200,000 at 20%, a new top bracket above the old 19% rate. The Canada Revenue Agency already lists it for the 2026 tax year and says it applies for 2026 and later years, so it covers 2027 as well. Income up to $200,000 is taxed at the same rates as before. On $250,000 of taxable income the new bracket adds $500 of provincial tax.
What are the PEI tax brackets for 2026 compared with 2025?
The Canada Revenue Agency publishes the provincial rates on its Canada Revenue Agency: tax rates and income brackets for 2026 page and its Canada Revenue Agency: tax rates and income brackets for 2025 page. Each rate applies only to the slice of taxable income inside its bracket. The table puts the two years side by side.
| PEI rate | 2025 taxable income | 2026 taxable income |
|---|---|---|
| 9.5% | Up to $33,328 | Up to $33,928 |
| 13.47% | $33,328 to $64,656 | $33,928 to $65,820 |
| 16.6% | $64,656 to $105,000 | $65,820 to $106,890 |
| 17.62% | $105,000 to $140,000 | $106,890 to $142,520 |
| 19% | Over $140,000 | $142,520 to $200,000 |
| 20% | No such bracket | Over $200,000 |
Every threshold from the first to the fourth rose by about 1.8% between 2025 and 2026 (our calculation: the fourth threshold went from $140,000 to $142,520). The CRA rate pages show no PEI table for 2027 yet (checked 31 October 2026), so whether the thresholds move again for 2027 has not been published yet.
Does the 20% bracket start in 2026 or in 2027?
The date you may have seen is 1 January 2027, because early coverage of the 2026 provincial budget gave that as the start. The CRA’s current-year rate page, which lists PEI’s 20% bracket among the 2026 rates, and its payroll tables from 1 July 2026 point to 2026. Those tables say the province introduced a 20% rate for taxable income above $200,000, applying for 2026 and later years. If you plan around 2027, you are a year behind: a high earner’s 2026 return, filed in 2027, is the first one to use the new rate.
The same July payroll page says some of the changes it reflects were proposed when it was published and may not have been law at that time. We could not confirm the final legislative step on a PEI government page, so check the CRA rate page again before you file.
Will my employer withhold 21% from my pay?
Possibly, for part of 2026. The Canada Revenue Agency: T4032PE payroll deductions tables, July 2026 explain that employers used the lower rates for the first six months of 2026. To catch up, the tables use a prorated 21% rate on taxable income above $200,000 from the first July payroll. As we read it, that is a withholding rate for the second half of the year. The rate for the year as a whole is 20%, and your return settles any difference.
Who pays more because of the new bracket?
Only people with taxable income above $200,000. Taxable income is what is left after deductions, so a salary of $200,000 can land below the line, and a large taxable capital gain in one year can push a lower income above it. The extra tax is one percentage point of the slice above $200,000, compared with a 19% rate on that slice.
| Taxable income | Slice above $200,000 | Extra provincial tax from the 20% bracket |
|---|---|---|
| $200,000 | $0 | $0 |
| $250,000 | $50,000 | $500 |
| $300,000 | $100,000 | $1,000 |
| $500,000 | $300,000 | $3,000 |
These extra amounts are our calculation from the published rates.
How much PEI tax is there on $250,000 of taxable income?
This example uses the 2026 brackets from the table above and works out provincial tax before any credits. It is our calculation, not a CRA figure.
| Slice | Amount in slice | Rate | Tax |
|---|---|---|---|
| First | $33,928 | 9.5% | $3,223.16 |
| Second | $31,892 | 13.47% | $4,295.85 |
| Third | $41,070 | 16.6% | $6,817.62 |
| Fourth | $35,630 | 17.62% | $6,278.01 |
| Fifth | $57,480 | 19% | $10,921.20 |
| Last | $50,000 | 20% | $10,000.00 |
| Total | $250,000 | $41,535.84 |
If the last $50,000 were still taxed at 19%, it would cost $9,500. The new bracket therefore adds $500, which matches the table in the previous section. The federal tax on the same income is separate and is worked out on its own brackets.
What is the combined federal and PEI top rate?
The federal 2026 rate is 29% on taxable income up to $258,482 and 33% above that. Adding the PEI rate on top gives 49% on the slice between $200,000 and $258,482, and 53% above $258,482. Before the new bracket the PEI rate was 19%, so the top combined rate was 52%. These are sums of the statutory rates on ordinary income and are our calculation, not an official figure. They leave out credits and any other taxes, and dividends and capital gains are taxed differently. Our marginal tax rate calculator shows a rate for your own income.
What should I check or watch for?
Three things. First, the CRA’s 2027 PEI rate table has not been published yet (checked 31 October 2026), and the federal 2027 brackets are in the same position, so our 2026 vs 2027 tax numbers page lists what is confirmed. Second, if your taxable income sits near $200,000, ask an accountant how things like RRSP contributions or the timing of a sale affect your bracket. Third, compare your pay stub with the figures above, since the July withholding rate differs from the yearly rate. For more background, read our PEI tax guide, the Prince Edward Island province page, the Canadian tax brackets table and the PEI take-home pay page. This site gives information only and does not speak for the CRA or the province.
Where does this information come from?
Rates and thresholds come from the Canada Revenue Agency pages Tax rates and income brackets for 2026 and for 2025, and the T4032PE payroll deductions tables for 1 July 2026. Federal rates come from the same Canada Revenue Agency rate pages. The worked example and the combined rates are our own calculations from those published figures. Checked on 31 October 2026. This is an independent information site: we provide no services, we do not represent the CRA or any organization, we collect information from open sources, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it. Check the official source before you rely on it. See the full disclaimer.
Frequently asked questions
What is PEI's top tax rate?
Prince Edward Island's top provincial rate is 20% on taxable income above $200,000. The Canada Revenue Agency lists it among the 2026 rates, and its payroll page says it applies for 2026 and later years. The rate below $200,000 is 19% on the slice from $142,520 to $200,000.
When does PEI's new 20% tax bracket start?
Early budget coverage gave 1 January 2027, but the Canada Revenue Agency's rate page for the 2026 tax year already lists the 20% bracket over $200,000, and its payroll tables apply it for 2026 and later years. Check the CRA page again before you file, since some payroll changes were proposed when it was published.
How much more tax does the 20% PEI bracket cost?
One percentage point of the income above $200,000. On $250,000 of taxable income that is $500 more provincial tax than a 19% rate would give, and on $300,000 it is $1,000. This is our calculation from the published rates. Income under $200,000 pays nothing extra.
What is the combined federal and PEI top tax rate?
Adding the statutory rates on ordinary income, 2026 gives 49% between $200,000 and $258,482 and 53% above $258,482 (federal 29% and 33% plus PEI 20%). That is our calculation, not an official figure, and it leaves out credits and other taxes.
Why is my employer withholding 21% on income over $200,000?
The Canada Revenue Agency's July 2026 payroll tables use a prorated 21% rate above $200,000 because employers used lower rates for the first six months of 2026. As we read it, the rate for the year as a whole is 20%, and your tax return settles any difference.