Canadian corporate tax calculator

Two rates, and in Ontario one is 2.2 times the other

A Canadian-controlled private corporation does not have a tax rate. It has two, and the boundary between them is a specific dollar of profit.

Within the small business limit — 12.2% in Ontario. 9.0% federal after the small business deduction, plus 3.2% provincial.

Above it — 26.5%. 15.0% federal plus 11.5% provincial.

On $400,000 of active business income that is $48,800, an effective rate of 12.2%. Take the same company to $800,000 and the bill is $140,500 — 17.56%, because the second $300,000 is taxed at more than double the first.

The federal general rate of 15.0% is itself a construction worth knowing: the Income Tax Act sets 38.0%, then subtracts a 10.0% federal abatement — which exists because the provinces tax the same profit — and then a 13.0% general rate reduction. Nobody pays the 38.0% in the statute.

$150,000 of investment income costs this company $57,200

This is the rule that catches successful small corporations, and it does not appear in any rate table.

The small business limit is ground down by passive investment income. Above $50,000 of adjusted aggregate investment income, the limit falls by $5 for every dollar of investment income. At $150,000 the limit is zero and the whole of the company's active profit is taxed at the general rate.

On $400,000 of active income in Ontario:

$0 of investment income — limit $500,000, tax $48,800.

$75,000 of investment income — limit $375,000, tax $52,375, which is $3,575 more than with none.

$100,000 of investment income — limit $250,000, tax $70,250, which is $21,450 more than with none.

$150,000 of investment income — limit $0, tax $106,000, which is $57,200 more than with none.

Read that last line again: earning $150,000 inside the company costs $57,200 of extra tax on income that has nothing to do with it. The marginal cost of that investment income is far more than the tax on the investment income itself — which is the entire point of the rule, introduced to stop corporations being used as tax-sheltered investment accounts.

The limit is separately ground down by paid-up capital between $10,000,000 and $50,000,000. That one is not modelled here, and it bites at a scale where you have accountants.

Where a $400,000 profit costs least

Combined federal and provincial, cheapest first:

1. Manitoba — $36,000 at 9.0%.

2. Yukon — $36,000 at 9.0%.

3. Prince Edward Island — $40,000 at 10.0%.

4. Saskatchewan — $40,000 at 10.0%.

5. Nova Scotia — $42,000 at 10.5%.

6. Alberta — $44,000 at 11.0%.

7. British Columbia — $44,000 at 11.0%.

8. Northwest Territories — $44,000 at 11.0%.

9. Quebec — $44,800 at 11.2%.

10. New Brunswick — $46,000 at 11.5%.

11. Newfoundland and Labrador — $46,000 at 11.5%.

12. Nunavut — $48,000 at 12.0%.

13. Ontario — $48,800 at 12.2% ← this page.

Manitoba and Yukon charge nothing at all provincially within the limit — a zero rate, not a reduced one, so the whole bill there is federal.

The order changes completely once you pass the limit. On $2,000,000 of profit the cheapest is Alberta at 20.0% and the dearest Newfoundland and Labrador at 25.37%, because at that size the general rate is doing all the work and the small business rate is a rounding error.

Three provinces set their own limit, and it is not $500,000

The federal business limit is $500,000. Most provinces match it. Three do not, and the mismatch has a real consequence: income between the two limits is taxed at the small business rate provincially and the general rate federally, on the same dollar.

Nova Scotia — $700,000. So $200,000 of profit gets 1.5% provincially and 15.0% federally.

Prince Edward Island — $600,000. So $100,000 of profit gets 1.0% provincially and 15.0% federally.

Saskatchewan — $600,000. So $100,000 of profit gets 1.0% provincially and 15.0% federally.

A calculator that applies one limit to both levels gets this wrong in exactly that band, and the band is wide enough to matter to a great many companies.

Two provinces collect their own, and one of them just moved

Eleven provinces and territories let the CRA collect their corporate tax alongside the federal. Alberta and Quebec do not — each administers its own, with its own return, its own filing deadlines and its own rules on top of its own rates.

Alberta charges 8.0% generally, the lowest in the country, and 2.0% within the limit.

Quebec raised its small business deduction on 4 May 2026: for tax years beginning after 29 April 2026 the deduction rises to 9.3% from 8.3%, which takes the minimum rate from 3.2% to 2.2%. A Quebec corporation with a year-end straddling that date is on the old rate; one starting after it is on the new one, and the figure here uses the new one.

Quebec also reduces its small business deduction according to paid hours or the share of activity in the primary and manufacturing sectors. A Quebec company with few paid employees may not get the rate shown at all, and that is a condition no calculator can check for you.

And none of this is what you pay

The corporate rate is the first of two layers, not the whole tax. Money taken out as salary is deducted by the company and taxed in your hands at personal rates. Money taken out as a dividend is not deducted, so it bears the corporate tax first and then personal tax on the grossed-up amount, with a dividend tax credit meant to offset the corporate layer already paid.

The system is built so those two routes come out roughly level — that is what "integration" means in Canadian tax, and where it fails it fails by a percentage point or two rather than by a lot. Comparing 12.2% against a personal marginal rate and concluding that incorporating saves you the difference is the single most common error about Canadian corporate tax, and it ignores the second layer entirely.

What incorporation genuinely buys is deferral: profit left inside the company is taxed once at 12.2% and can stay there. If you need the money to live on, there is nothing to defer and the advantage largely disappears. The self-employed calculator has the unincorporated comparison.

Where these rates come from

Federal and eleven provinces from the CRA's own table; Alberta and Quebec from the administrations that actually collect them:

CRA — Corporation tax rates (federal rates and the provincial table) — read 2026-09-08. https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/corporations/corporation-tax-rates.html

Government of Alberta — Tax, levy and prescribed interest rates (Alberta administers its own corporate tax) — read 2026-09-08. https://www.alberta.ca/about-tax-levy-rates-prescribed-interest-rates

Revenu Québec — Hausse du taux de la déduction pour petite entreprise (the 3.2% to 2.2% change) — read 2026-09-08. https://www.revenuquebec.ca/fr/salle-de-presse/nouvelles-fiscales/details/2026-05-04/hausse-du-taux-de-la-deduction-pour-petite-entreprise/

And what this does not cover:

— This is tax on active business income of a Canadian-controlled private corporation. Investment income earned inside a corporation is taxed under an entirely different regime, at a much higher rate, with part of it refundable when dividends are paid out.

— The business limit is also ground down by paid-up capital between $10 million and $50 million, which is not applied here. Only the passive-income grind is modelled.

— Quebec applies a further reduction to its small business deduction based on paid hours or on the share of activity in the primary and manufacturing sectors. A Quebec corporation with few paid hours may not get the full rate shown.

— The reduced rates for manufacturers of qualifying zero-emission technology — 7.5% general and 4.5% small business federally — are not applied.

— Nothing here covers what it costs to get the money out. Paying yourself a salary or a dividend is taxed again in your hands, and the whole point of the Canadian system is that the two layers are meant to approximate one; comparing a corporate rate against a personal rate without that second layer compares nothing.

Questions

What is the corporate tax rate in Canada?

Two rates, not one. Within the $500,000 small business limit a CCPC pays 12.2% in Ontario — 9.0% federal plus 3.2% provincial. Above it, 26.5%. On $400,000 of active income that comes to $48,800.

Why is the federal rate 15% when the Income Tax Act says 38%?

Because two reductions apply to every active business. The 10.0% federal abatement recognises that provinces tax the same profit, and the 13.0% general rate reduction was legislated on top. 38.0% minus 10.0% minus 13.0% is 15.0%.

How does investment income affect the small business limit?

It grinds it away. Above $50,000 of adjusted aggregate investment income the limit falls by $5 for every dollar, and at $150,000 it is gone entirely. On $400,000 of active income in Ontario that costs $57,200 — tax on business income triggered by investment income that has nothing to do with it.

Which province has the lowest corporate tax?

On $400,000, Manitoba at 9.0% — it charges nothing provincially within the limit. Above the limit the ranking reorders, because the general rate takes over; Alberta's 8.0% is the lowest general rate in the country.

Should I incorporate to pay less tax?

Only if you can leave money in the company. The corporate rate is the first of two layers: taking the money out as salary or dividends is taxed again personally, and the system is designed so the two routes come out roughly level. What incorporation buys is deferral on profit you do not need to spend, not a lower rate on money you do.

Do Alberta and Quebec have different rules?

They administer their own corporate tax rather than having the CRA collect it, with their own returns. Alberta charges 8.0% generally. Quebec raised its small business deduction for tax years beginning after 29 April 2026, taking the minimum rate to 2.2%, and separately reduces it based on paid hours or sector.