Corporate Tax Rates and Legislation: Q1 2026 Accounting Status

Issue 1 – Q1 2026 Accounting Status

• Legislative changes—January 1 to March 31, 2026
• Accounting updates—January 1 to March 31, 2026
• Federal and provincial/territorial bills—tabled or received royal assent in 2026
• Corporate income tax rates—accounting status (January 1, 2023 to March 31, 2026)

Legislative changes — January 1 to March 31, 2026

Legislative developments from January 1 to March 31, 2026 that affect income taxes, are outlined below.

Federal draft legislative proposals (2025 federal budget and other proposals)

On January 29, 2026, the Department of Finance released draft legislative proposals to implement several 2025 federal budget and other measures. Key measures include:

• providing immediate expensing (i.e. a 100% first-year capital cost allowance (CCA) deduction) for the cost of acquiring, or making additions or alterations to, eligible buildings acquired after November 3, 2025 and first used for manufacturing and processing (M&P) before 2030 (phased out 2030 to 2033 and eliminated after 2033)
• clarifying, for the purposes of determining eligible activities under the Canadian exploration expense, that expenses incurred for the purpose of determining the quality of a mineral resource in Canada do not include those related to determining the economic viability or engineering feasibility of the mineral resource
• expanding, under the clean hydrogen investment tax credit (ITC), eligible hydrogen production pathways to include hydrogen produced from methane pyrolysis
• eliminating the tax benefits arising from hybrid mismatch arrangements – i.e. the second package of hybrid mismatch rules that were initially announced in the 2021 federal budget (see our Tax Insights “Finance releases second package of hybrid mismatch rules”)
• clarifying that income derived from assets held by a foreign affiliate of a Canadian insurance company that support Canadian insurance risks is taxable in Canada
• amending the Global Minimum Tax Act to implement a “de-consolidation” rule in respect of multinational enterprise groups when there is a private Canadian corporation that holds controlling interests in one or more public Canadian corporations (see our Tax Insights “Finance releases draft legislation to amend the Pillar Two rules and integrate the foreign affiliate regime with Pillar Two” (February 2, 2026 update)

Status: As at March 31, 2026, the draft legislative proposals have not been tabled as a bill in the House of Commons and, therefore, are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Federal Bill C-15 (2025 federal budget and other measures)

Federal Bill C-15, An Act to implement certain provisions of the budget tabled in Parliament on November 4, 2025, received royal assent on March 26, 2026. Bill C-15 includes legislation to implement many key tax measures, including:

• significant enhancements to the scientific research and experimental development tax incentive program
• various CCA measures, such as:
  • allowing immediate expensing (100% first‑year CCA deduction) for eligible M&P and specified clean energy equipment and zero-emission vehicles acquired after 2024 and that become available for use before 2030 (phased out 2030 to 2033 and eliminated after 2033); and class 44 (patents), 46 (data network infrastructure equipment) and 50 (general-purpose electronic data processing equipment and systems software) property acquired after April 15, 2024 and that becomes available for use before 2027
  • reinstating the Accelerated Investment Incentive, which provides an accelerated first-year CCA deduction on qualifying depreciable property acquired after 2024 and that becomes available for use before 2030 (phased out 2030 to 2033 and eliminated after 2033)
  • introducing an accelerated 10% CCA for new eligible purpose-built rental projects that begin construction after April 15, 2024 and before 2031, and are available for use before 2036
• reinstatement of the enhanced first‑year deduction (i.e. reacceleration) of qualifying Canadian development expenses and Canadian oil and gas property expenses incurred after 2024 and before 2034
• a new clean electricity ITC, expanded eligibility for the clean technology and clean technology manufacturing ITCs and extending full credit rates for the carbon capture, utilization and storage ITC
• major changes to Canada’s transfer pricing rules
• repeal of the Digital Service Tax Act and Digital Services Tax Regulations as of June 30, 2024 (date of original enactment)

For more information, see our Tax Insights “Bill C-15 implements SR&ED, capital cost allowance and transfer pricing changes and more” (March 27, 2026 update).

Status: Bill C-15 is considered substantively enacted for Canadian GAAP as at February 26, 2026, and enacted for US GAAP as at March 26, 2026 (also, see Table 1 below).

Quebec Information Bulletin 2026-1

On January 28, 2026, Quebec’s Ministère des Finances released Information Bulletin 2026-1 “Expansions of temporary contribution holiday to the Health Services Fund in the agriculture, forestry and fishing sectors and other adjustments to the Québec tax system.” Information Bulletin 2026-1 provides details relating to expanding the temporary contribution holiday to the Health Services Fund (HSF) to support the agriculture, forestry and fishing sectors, retroactive to January 1, 2026.

Status: As at March 31, 2026, the HSF contribution holiday measures in Information Bulletin 2026-1 have not been tabled as a bill in the National Assembly of Québec and, therefore, are not considered substantively enacted for Canadian GAAP or enacted for US GAAP.

Provincial/territorial budgets

The following provinces and territories introduced budgets from January 1 to March 31, 2026. None of these budgets announced changes to general and M&P corporate income tax rates. Visit www.pwc.com/ca/taxinsights for key changes respecting:

• British Columbia – see our Tax Insights “2026 British Columbia budget: Tax highlights”
• Ontario – see our Tax Insights “2026 Ontario budget: Tax highlights”
• Quebec – see our Tax Insights “2026-2027 Québec budget: Tax highlights”
• Saskatchewan – see our Tax Insights “2026 Saskatchewan budget: Tax highlights”

The provincial or territorial budgets for Alberta, Manitoba, New Brunswick, Northwest Territories, Nova Scotia and the Yukon did not introduce any significant tax measures.

Status: As at March 31, 2026, some of the provinces and territories (e.g. Alberta, British Columbia, Nova Scotia, Ontario and Saskatchewan – see Table 1 below) have tabled legislation to implement certain budget measures, but none of the measures relate to general corporate income tax changes.

Trade tariffs and government support

United States President Donald Trump continues to issue executive orders that impose tariffs (or alter tariff rates) on certain goods imported from Canada. The US Supreme Court recently ruled that the International Emergency Economic Powers Act (IEEPA) does not authorize presidential tariffs. As a result, all tariffs imposed under IEEPA are invalid, and US Customs and Border Protection stopped collecting IEEPA tariffs on February 24, 2026. Importers that previously paid these tariffs will be entitled to refunds. Businesses affected by IEEPA tariffs should consider the broader impacts of IEEPA refunds on tax, transfer pricing, financial reporting and contracts.

While this ruling removes IEEPA-based tariffs, it does not mean that tariffs are ending. Instead, tariff policy is shifting, and tariffs remain in place across key sectors (i.e. aluminum, steel, automotive, copper, lumber, etc.). For more information on the current tariff situation and to help your business assess and manage these tariffs, visit our Tariffs and Trade Policy Resource Centre.

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Accounting updates — January 1 to March 31, 2026

There were no significant updates relating to the accounting for income tax.

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Federal and provincial/territorial bills 

Table 1 lists key bills that include corporate income tax rate changes or other income tax changes (e.g. for research and development) that were:

• tabled or received royal assent during 2026, or
• tabled before 2026, but did not receive royal assent before 2026

Table 1: Federal and provincial/territorial bills
Bolded rows indicate a change in status from January 1 to March 31, 2026.

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Corporate income tax rates—accounting status (January 1, 2023 to March 31, 2026) 

The following information excludes Canadian-controlled private corporation small business rates and thresholds.

Table 2: Corporate income tax rates—accounting status
There were no changes in status from January 1 to March 31, 2026.

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