Work out the tax on a capital gain from shares, crypto or investment property — half the gain is added to your income and taxed at your combined federal and provincial rate.
The proposed increase of the inclusion rate to two-thirds was cancelled in March 2025; one-half applies.
A principal residence is usually exempt. Qualifying small business shares and farm or fishing property may use the lifetime capital gains exemption.
This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency.
How capital gains are taxed
Capital gain = proceeds of disposition − adjusted cost base (ACB) − selling costs. The ACB is what you paid plus purchase costs, averaged across all identical shares you own.
Taxable capital gain = 50% of the gain.
The taxable gain is added to your income and taxed at your combined federal and provincial marginal rate. The calculator works out your full tax with and without the gain.
So the effective rate on a capital gain is half your marginal rate: around 15% for a middle-income Ontarian, up to about 27% at the top rate in most provinces.
Worked example: $30,000 gain in Ontario
$30,000 gain, other income $85,000, Ontario, 2026
Half of the $30,000 gain — $15,000 — is added to income. Taxable income rises to about $100,000, still inside the 20.5% federal and 9.15% Ontario brackets, so the extra tax is $4,473.
Tax on the gain$4,473Ontario
Taxable capital gain (50%)
$15,000
Effective rate on the gain
14.91%
Kept after tax
$25,527
Proceeds
$80,000.00
Less adjusted cost base
−$50,000.00
Capital gain
$30,000.00
Inclusion rate
50.0%
Taxable capital gain added to income
$15,000.00
Extra federal + provincial tax
$4,473.29
Tips
Use your TFSA and RRSP: gains inside them are not taxed when realised.
Harvest losses before year-end to offset gains, but avoid buying the same security back within 30 days (superficial loss rule).
Spread large gains over more than one year with a capital gains reserve when you receive sale proceeds over time.
Track your ACB carefully, including reinvested distributions and return of capital.
Questions people ask
What is the capital gains inclusion rate in 2026?
50%. The proposed increase to two-thirds for gains over $250,000 was cancelled in March 2025, so half of every capital gain is taxable.
Is selling my home taxed?
Usually not. The principal residence exemption covers a home you ordinarily lived in for every year you owned it. You must still report the sale on Schedule 3.
How are capital losses used?
Half of a capital loss is an allowable capital loss. It offsets taxable capital gains in the same year, can be carried back three years or forward indefinitely, but cannot reduce other income.
What is the lifetime capital gains exemption?
It shelters gains on qualified small business shares and farm or fishing property, up to $1.25 million of gains.
This is an estimate based on published rates, not tax or financial advice. Your payslip or assessment may differ. We are an independent site, not affiliated with any government agency. Read the full disclaimer.
