Budget 2026 includes a large swath of tax changes, threshold and credit updates aimed at reducing the “time tax” Canadians pay every year to file their returns at tax season by making some elements simpler.
From new receipt-free flat rate tax deductions to a tax installment threshold increase and a top-up to the Grocery and Essentials Benefit, Ottawa says these measures will “reduce the time and effort Canadians are required to spend managing their tax affairs.”
“Budget 2026 proposes practical changes to simplify deadlines, filings, and interactions with the CRA, ultimately reducing the time tax on Canadians,” the budget says.
Here’s a look at some of the key tax changes that could impact Canadians.
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Tax filing deadline change
May 15 is now the deadline for both Canadians and self-employed workers to file their tax returns and pay all taxes owed to the Canada Revenue Agency (CRA).
By consolidating all previous tax deadlines into one, the federal government says tax filing will be simpler and afford most Canadians a few extra weeks to get their information in and taxes paid.
The previous deadline was April 30 for most Canadian filers to both submit their returns and pay the taxes owed, while self-employed individuals had until June 15. For self-employed filers, even though the deadline was later, they would still have to pay the taxes they owe to the CRA by April 30.
“The date change is expected to save the number of taxpayers potential interest and penalties from late filing,” says Rob Jeffrey, national tax policy leader and a partner with Deloitte.
“It will remain to be seen if those that file late will continue to file late with the extended deadline.”
By allowing for two more weeks to file and pay taxes, the federal government says changing the date is expected to save Canadians $230 million in interest and penalty payments over five years, starting in the upcoming tax year.
Jeffrey continued: “The other thing that I think the extra two weeks will do is that when individuals are preparing and filing their personal tax returns, they’re relying on information from a number of different sources.”
“Having an extra two weeks should allow more of those slips to automatically come through and hopefully reduce the amount of back and forth or potential disputes after the fact.”
Tax objection timeframe extended
The budget also extends the timeframe for Canadians to file a notice of objection with the CRA from 90 days to one year.
Canadians can file a notice of objection with the CRA if they disagree with how it applied tax laws, calculated income or deductions, or assessed penalties and interest.
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Sometimes, Canadians would have been able to request an extension to file an objection to the CRA for up to a year, but by extending the timeframe to file an objection to a year, the budget says Canadians can remove the need to request those extensions. This, Ottawa says, not only simplifies the process for Canadian tax payers, but also for the CRA by not having to review and approve extension requests.
Optional Flat-Rate Deductions
The budget says Canadians will have the option to claim preset tax deduction amounts for certain expenses rather than having to provide receipts and other documents to verify specific amounts.
This means Canadians won’t have to keep track of receipts throughout the year and itemize their expenses when it comes time to submit their taxes, which the budget says will reduce the burden of complying with a tax system that “can discourage Canadians from claiming the deductions and credits they are eligible for.”
Tax deductions reduce the total amount of income subject to taxes by the CRA, and Canadians still have the option to submit expenses using an itemized list and receipts if they choose.
One of those preset deductions is if someone has to relocate for a job or spends money on travelling for work. Eligible Canadians can either continue to submit individual receipts and itemize each expense to the CRA, or they can claim a flat amount of $1,000, and those in the trades can claim $1,500 through the Labour Mobility Deduction for Tradespeople.
There are also preset deductions for the Home Accessibility Tax Credit of $1,000 for qualifying renovations.
Eligible parents adopting children can also claim a flat-rate deduction of $1,200 per child.
Other preset deductions include the Medical Expense Tax Credit of $2,000 for service dog care and maintenance, and an optional flat $500 for incontinence products required for medical purposes.
Individuals with celiac disease would also be allowed to claim an optional flat $1,000 for some gluten-free food expenses.
Eligible clergy members can claim a flat deduction of $1,000 for some housing expenses as well without the need to track and document these expenses
Tax installment thresholds increasing
For Canadians and businesses that pay their taxes in regular quarterly instalments to the CRA, Budget 2026 is proposing changes to take effect in 2028 that will allow for fewer payments in a year by increasing the individual payment thresholds.
This, the government says, will mean spending less time on complex paperwork, and being able to pay off taxes earlier can even give the opportunity for improved cash flow that can be invested in Canadians’ businesses and daily lives.
Ottawa says it will look to increase instalment thresholds from $3,000 to $7,500 and index them to inflation.
This means, if someone owes $12,000 a year in taxes and normally pays the CRA with quarterly instalments of $3,000 each, they could instead pay all of that owed tax in two installments instead of across four.
Self-employed business owners would be able to make a single payment of two-thirds of their net tax owing by the end of the calendar year if these proposed changes go into effect in 2028, the budget says.
Seniors would also benefit from these changes because income generated from Old Age Security, Canada Pension Plan and a Registered Retirement Income Fund are not subject to tax withholding like most employment income. Most seniors receiving this income have to withhold their own tax and pay to the CRA via instalments, which are currently under the $3,000 threshold.
By increasing the threshold to $7,500 each, more seniors could pay off their taxes in fewer or one instalments, and reduce complex paperwork.
Canada Groceries and Essentials Benefit top-up
Canadians who file their taxes with the CRA, and have incomes that qualify them for the Canada Groceries and Essentials Benefit (CGEB) will also be getting a 50 per cent top up.
Budget 2026 says the top up will be delivered to eligible Canadians by early 2027, although benefit dates have not yet been released.
The top up is equivalent to 50 per cent of the total annual benefit qualifying Canadians are entitled to receive, which is calculated based on the most recent tax year.
Small business tax incentives
There are also a handful of tax measures introduced in Budget 2026 designed to empower small businesses and self-employed business owners and entrepreneurs.
This comes as many have been struggling with U.S. tariffs weighing on sales, while higher fuel costs have reduced already razor-thin profit margins.
One of the measures is the Productivity Mega Deduction, which allows businesses of all sizes to permanently deduct the full cost of eligible capital assets in the first year they are purchased rather than over the life of the asset. This can include equipment like a new coffee machine for a cafe, a fleet of vehicles for a plumbing company or new software for a tech startup.
By deducting the full cost in the first year, it sharply lowers taxable income much sooner, which can free up cash to pay workers, make repairs, or reinvest in other ways.
Budget 2026 also includes the Canada Growth Incentive, which helps Canadian business founders attract investment and grow by offering a tax exemption on up to $15 million in capital gains, which happens when someone sells an investment and makes a profit that is subject to tax.
This can also help successful entrepreneurs to keep growing their business because they can rollover the profit made from selling their previous business if they reinvest it into their next Canadian success story.
