OTTAWA, ON: The Canadian Taxpayers Federation released its annual New Year’s Tax Changes report today to highlight major tax changes taking effect in 2026.

“The dawn of the new year is a mixed bag for taxpayers,” said Noah Jarvis, CTF Ontario Director. “Ontario taxpayers are facing tax hikes in the form of bracket creep and increases to the industrial carbon tax while also benefiting from federal income tax cuts and sales tax relief for first-time homebuyers.”

Bracket creep: The Ontario government is raising taxes on income earners in the top two tax brackets by failing to index these brackets to inflation. The government is also hiking taxes on low-income Ontarians by failing to index the Low-Income Individuals and Families tax credit to inflation.

HST for first-time homebuyers: Both the federal and Ontario governments are exempting first-time homebuyers from paying the HST on home purchases of up to $1 million. First-time homebuyers purchasing a home between $1 million and $1.5 million will also have their HST partially reduced. 

Payroll taxes: The federal government is raising the maximum mandatory Canada Pension Plan and Employment Insurance contributions in 2026. These payroll tax increases will cost a worker up to $262 more next year.

Income tax: The federal government cut the lowest income tax rate from 15 to 14 per cent. This will save the average taxpayer $190 in 2026, according to the Parliamentary Budget Officer.

Carbon tax: The federal government cancelled its consumer carbon tax effective April 1, 2025. However, it continues to impose carbon taxes through its industrial carbon tax and a hidden carbon tax embedded in fuel regulations. 

The industrial carbon tax will increase to $110 per tonne in 2026. While Ottawa has not provided details of how much the industrial carbon tax will cost Canadians, 70 per cent of Canadians believe businesses pass on most or some of the cost of the tax to consumers, according to a Leger poll.

“Canadians pay too much tax because the government wastes too much money,” said Franco Terrazzano, CTF Federal Director. “Canadians are overtaxed and need serious tax cuts to help make life more affordable and our economy more competitive.”

You can read the CTF’s New Year’s Tax Changes report here.