The Canadian Taxpayers Federation says Canadians will see mixed tax changes in 2026, with modest income tax relief offset by higher payroll and industrial carbon taxes, according to its annual New Year’s Tax Changes report.“There’s some good news and bad news for taxpayers in 2026,” said Franco Terrazzano, CTF Federal Director. “The federal government cut income taxes, but it’s hiking payroll taxes. The government cancelled the consumer carbon tax, but it’s hammering Canadian businesses with a higher industrial carbon tax.”Payroll taxes will rise next year as the federal government increases the maximum mandatory Canada Pension Plan and Employment Insurance contributions. Workers making $85,000 or more will see federal payroll taxes reach $5,770, while their employers will be forced to spend $6,219. The increase could cost some workers an additional $262 in 2026.Income taxes provide a small offset. The federal government reduced the lowest income tax rate from 15% to 14%, saving the average taxpayer about $190 in 2026, according to the Parliamentary Budget Officer..Carbon taxes remain a major concern. While the consumer carbon tax was cancelled effective April 1, 2025, the industrial carbon tax is set to rise to $110 per tonne in 2026. Industry observers warn much of this cost will be passed on to consumers. A recent Leger poll found 70% of Canadians believe businesses transfer some or most of the tax to customers.Alcohol taxes are also increasing. .Federal excise taxes on beer, wine, and spirits will rise 2% on April 1, 2026, under the automatic alcohol escalator first introduced in the 2017 budget. The hike is expected to cost taxpayers about $41 million in 2026-27 and has already added roughly $1.6 billion in cumulative costs since its inception, according to industry estimates.“Canadians pay too much tax because the government wastes too much money,” Terrazzano said. “Canadians are overtaxed and need serious tax cuts to help make life more affordable and our economy more competitive. Prime Minister Mark Carney needs to significantly cut spending, provide major tax relief and scrap all carbon taxes.”
