The NDP’s push to raise Canada’s capital gains inclusion rate from one-half to two-thirds was cancelled by Prime Minister Mark Carney on March 21, 2025, before it ever took legal effect.1Prime Minister of Canada. Prime Minister Mark Carney Cancels Proposed Capital Gains Tax Increase The inclusion rate stays at 50% for individuals, corporations, and trusts heading into 2026.2Canada Revenue Agency. Line 12700 – Taxable Capital Gains
What the NDP Wanted
The NDP has long argued the 50% inclusion rate gives investment income a structural advantage over wages. Someone earning $100,000 from a job pays tax on every dollar; someone earning $100,000 from selling investments pays tax on only half. The party frames closing that gap as a fairness measure.
During the confidence-and-supply agreement with the Liberal minority government from 2022 to 2024, the NDP pushed the increase into Budget 2024. The plan raised the inclusion rate to two-thirds on capital gains above $250,000 per year for individuals, and on every dollar of gain for corporations and trusts.3Department of Finance Canada. Capital Gains Inclusion Rate The government projected billions in new revenue. Critics said the change would discourage investment and hurt owners selling small businesses at retirement.
In the 2025 federal election, the NDP campaigned to keep the higher rate as part of a broader package that included a wealth tax on fortunes over $10 million and a 2% surtax on corporate profits above $500 million a year.
How the Proposal Died
The legislation was never formally enacted. In January 2025 the government deferred the effective date from June 25, 2024 to January 1, 2026, applying that delay to individuals, corporations, and trusts alike.4Department of Finance Canada. Government of Canada Announces Deferral in Implementation of Change to Capital Gains Inclusion Rate
Two months later, Mark Carney replaced Justin Trudeau as Liberal leader and Prime Minister. One of his first moves was to cancel the proposed increase outright.1Prime Minister of Canada. Prime Minister Mark Carney Cancels Proposed Capital Gains Tax Increase The Conservatives had already pledged to do the same. The NDP was the only major party still defending the higher rate.
How Capital Gains Are Taxed in 2026
With the increase cancelled, the rules are what they have been for years. When you sell an asset for more than you paid, half the profit is added to your taxable income for the year.2Canada Revenue Agency. Line 12700 – Taxable Capital Gains That taxable portion is then taxed at your marginal rate, exactly like employment income.
On a $200,000 capital gain, the math looks like this: $100,000 gets added to your other income. If your marginal federal rate on that additional income is 29%, you owe $29,000 in federal tax, plus your provincial share. The other $100,000 is yours free and clear. The same 50% inclusion rate applies to individuals, corporations, and trusts.
Your Principal Residence
Selling your principal residence generally triggers no capital gains tax. If the property was your principal residence for every year you owned it, the entire gain is exempt.5Canada Revenue Agency. Principal Residence – Canada.ca You still have to report the sale and designate the property on your return; skipping that step can cost you the exemption.
You, your spouse or common-law partner, or your children must have lived in the home during each year you claim. The land is normally capped at half a hectare (about 1.24 acres) unless you can show more was needed for the use and enjoyment of the home. A family can only designate one property per year, so a cottage does not qualify for the same years your main home does.
Registered Accounts
Gains earned inside a TFSA, RRSP, RESP, or FHSA are sheltered entirely. Buying and selling inside these accounts triggers no capital gains tax. TFSA withdrawals come out tax-free. RRSP and RESP withdrawals are taxed as regular income when you take the money out, but the gains themselves never face capital gains treatment. The whole inclusion rate debate never touched money held in registered accounts.
What Did Survive From Budget 2024
The Lifetime Capital Gains Exemption rose to $1,250,000, effective June 25, 2024.4Department of Finance Canada. Government of Canada Announces Deferral in Implementation of Change to Capital Gains Inclusion Rate Starting in 2026 the exemption is indexed to inflation, so it will edge up each year.
The LCGE applies when you sell qualified small business corporation shares or qualified farm or fishing property.6Canada Revenue Agency. Line 25400 – Capital Gains Deduction Sell a qualifying small business for a $1.25 million gain and the entire gain can be sheltered. It is a lifetime cap, so anything you use now reduces what remains later. It does not apply to publicly traded stocks, rental properties, or general investments.
Budget 2024 also introduced the Canadian Entrepreneurs’ Incentive, which would apply a one-third (33.3%) inclusion rate to a lifetime maximum of $2 million in eligible gains, sitting on top of the LCGE.7Department of Finance Canada. The New Canadian Entrepreneurs’ Incentive To qualify, you must be a founding investor holding at least 10% of shares, and the company must have been your principal employment for at least five years. Professional corporations, financial services, real estate, food and accommodation, and several other sectors are excluded. Because this incentive was part of the same Budget 2024 package as the cancelled inclusion rate increase, its current legislative status is uncertain. If you are counting on it, confirm with a tax professional whether it remains available.
What Could Come Next
The cancellation was a defeat for the NDP’s tax agenda, but the party has not dropped the issue. Its 2025 platform projected roughly $170 billion in new revenue over four years from a wealth tax, capital gains measures, a corporate surtax, a minimum tax, and the closure of other loopholes. The NDP continues to argue that a 50% inclusion rate amounts to a preferential regime for high earners, since capital gains are concentrated at the top of the income distribution.
Whether any of this returns depends on Parliamentary math. The NDP’s leverage peaked under the confidence-and-supply arrangement, and a future minority could reopen the file. For now, the 50% rate is firmly in place. If your gains are large enough that a rate change would move real money, keeping some flexibility in the timing of a sale is the simplest hedge against a future shift.