Estimate the tax on a capital gain from shares, funds or a rental or cottage property using the one-half inclusion rate and your marginal rate.
In Canada only half of a capital gain is included in income (the inclusion rate is one-half; the 2024 proposal to raise it to two-thirds was cancelled in March 2025). The included half is taxed at your marginal rate, so the effective rate on the whole gain is about half your marginal rate.
Formula: effective rate = 50% × combined marginal rate; tax ≈ gain × effective rate.
Worked example (illustrative, Ontario, 2026): you sell shares in a non-registered account for $50,000 that cost $29,700 including commissions, and pay $300 to sell, so the gain is $20,000. Taxable capital gain is $10,000. If that extra $10,000 falls in the 29.65% band, tax is about $2,965, an effective 14.83% of the gain, and you keep about $17,035.
Watch for: a big gain can push the taxable half into a higher bracket, so split it across bands if needed. Capital losses can offset gains of the same year, three prior years or any future year. Gains inside a TFSA, RRSP or FHSA are not reported. A principal residence is usually exempt if designated. Details are in the capital gains guide. General information only, not tax advice.
2026 Brackets, Credits and Rules
How capital gains are taxed in Canada in 2026 after the two-thirds increase was cancelled: inclusion rate, adjusted cost base, losses, principal residence and the LCGE.
