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16 April 2026 Canada | Prince Edward Island Budget 2026 [updated]
Update: On 22 April 2026, Prince Edward Island Finance Minister Jill Burridge tabled a corrected version of “Appendix VII: Provincial Tax Changes” to the 2026 Estimates of Revenue and Expenditures budget document. The correction clarifies that the new personal income tax bracket announced in the budget will apply as of 1 January 2026, rather than beginning in 2027, as previously indicated in Appendix VII. This correction aligns with the coming into force of the amendments implementing the new income tax bracket contained in Bill 23, An Act to Amend the Income Tax Act, which received first reading on 17 April 2026. This Alert has been updated to reflect the government’s correction. On 14 April 2026, Prince Edward Island Finance Minister Jill Burridge (the Minister) tabled the province's fiscal 2026 budget. The budget contains tax measures affecting individuals and corporations. The Minister anticipates a deficit of CA$449.6m for 2025-26 and projects a deficit of CA$410m for 2026-27, followed by further deficits for each of the following two years (CA$386.2m for 2027-28 and CA$338m for 2028-29).
2 The federal corporate income tax rates for manufacturers of qualifying zero-emission technology are reduced to 7.5% for eligible income otherwise subject to the 15% federal general corporate income tax rate or 4.5% for eligible income otherwise subject to the 9% federal small-business corporate income tax rate. These reductions are not reflected in the combined federal and Prince Edward Island rates above. 4 An additional tax applies to banks and life insurers at a rate of 1.5% on taxable income (subject to a CA$100m exemption to be shared by group members). The Minister proposes to add a new personal income tax bracket (for taxable income exceeding CA$200,000) beginning in 2026 as outlined in Table B.
1 Individuals resident in Prince Edward Island on 31 December 2026 with taxable income up to CA$18,684 pay no provincial income tax as a result of a low-income tax reduction. The low-income tax reduction is clawed back for income exceeding CA$23,000 until the reduction is eliminated, resulting in an additional 5% of provincial tax on income between CA$23,001 and CA$30,000. For taxable income exceeding CA$142,250, the 2026 proposed combined federal-Prince Edward Island personal income tax rates are outlined in Table C.
2 The federal basic personal amount comprises two elements: the base amount (CA$14,829 for 2026) and an additional amount (CA$1,623 for 2026). The additional amount is reduced for individuals with net income exceeding CA$181,440 and is fully eliminated for individuals with net income exceeding CA$258,482. Consequently, the additional amount is clawed back on net income exceeding CA$181,440 until the additional tax credit of CA$227 is eliminated; this results in additional federal income tax (e.g., 0.29% on ordinary income) on net income between CA$181,441 and CA$258,482. Effective for 2026, the budget proposes to increase the real property tax rate for nonresidents from CA$1.50 to CA$1.70 per CA$100 of taxable assessed value. A tax credit equivalent to this rate increase of CA$0.20 is proposed to be provided to nonresident apartment owners. Effective for fall 2026, the budget proposes to increase the insurance premium tax rates by 0.25 percentage points to 4.00% for life insurance, accident insurance and sickness insurance, and to 4.25% for other insurance. For up-to-date information on the federal, provincial and territorial budgets, visit ey.com/ca/Budget.
Document ID: 2026-0879 | |||||||||||||||||||||||||||||||||||||||||||||||||||
