May 06, 2026
Tax Highlights from the 2026 Prince Edward Island Budget
Minister of Finance Jill Burridge tabled the 2026/27 Prince Edward Island provincial budget on April 14, 2026.
The budget projects deficits of $410 million for the upcoming 2026/27 fiscal year, decreasing to $386.2 million for 2027/28 and $338 million for 2028/29. The forecast deficit for the 2025/26 fiscal year now stands at $449.6 million, compared to the previously projected deficit of $183.9 million. The net debt-to-GDP ratio is expected to rise from 33.2% as of 2025/26 to 39.9% on March 31, 2029, according to budget projections.
On the income tax front, the budget introduces a new personal income tax bracket on income over $200,000, effective next year. Other initiatives include increases to real property tax rates for non-residents and an increase in the insurance premium tax.
The following pages summarize the changes announced in the budget. Please note that these changes remain proposals until they are passed into law by the provincial government.
Personal Tax Matters
Personal Income Tax Rates and Tax Brackets
The budget introduces a new 20% personal income tax rate on income over $200,000, effective for the 2027 and subsequent taxation years. Prince Edward Island does not index its tax brackets to account for inflation. The table below outlines the province’s tax rates and tax brackets for 2026.
| TAXABLE INCOME RANGE | 2026 TAX RATES |
|---|---|
| First $33,928 | 9.50% |
| Over $33,928 to $65,820 | 13.47% |
| Over $65,820 to $106,890 | 16.60% |
| Over $106,890 to $142,250 | 17.62% |
| Over $142,250 | 19.00% |
The table below outlines the 2026 combined federal and provincial highest marginal tax rates for various types of income.
| INCOME TYPE | 2026 COMBINED TAX RATES |
|---|---|
| Regular income | 52.00% |
| Capital gains | 26.00% |
| Eligible dividends | 36.54% |
| Non-eligible dividends | 47.92% |
Personal Income Tax Brackets
Effective January 1, 2027, the budget introduces a new personal income tax bracket for income above $200,000. The table below outlines the province’s tax rates and tax brackets for 2027.
| TAXABLE INCOME RANGE | 2027 TAX RATES |
|---|---|
| First $33,928 | 9.50% |
| Over $33,928 to $65,820 | 13.47% |
| Over $65,820 to $106,890 | 16.60% |
| Over $106,890 to $142,250 | 17.62% |
| Over $142,250 to $200,000 | 19.00% |
| Over $200,000 | 20.00% |
Corporate Tax Matters
Corporate Income Tax Rates
There are no proposed changes to corporate income tax rates. The table below outlines Prince Edward Island tax rates and the small business limit for 2026.
| CATEGORY | 2026 TAX RATES |
|---|---|
| General rate | 15% |
| Manufacturing and processing rate | 15% |
| Investment income rate | 15% |
| Small business rate | 1% |
| Small business limit | $600,000 |
The table below outlines the 2026 combined federal and provincial corporate income tax rates for various types of income earned by a Canadian Controlled Private Corporation (CCPC).
| INCOME TYPE | 2026 COMBINED TAX RATES |
|---|---|
| Small business income | 10% |
| Active income over $500,000/ $600,000 | 16%/30% |
| Manufacturing and processing income | 30% |
| Investment income | 53.67% |
Other Initiatives
Real Property Tax
Effective for the 2026 calendar year, the budget increases the real property tax rate by $0.20 per $100 of assessed value for non-resident property owners. The tax rate will increase to $1.70 (from $1.50) per $100 of taxable assessed value. The budget also introduces a tax credit for non-resident apartment owners of $0.20 per $100 of taxable assessed value.
Insurance Premium Tax
Effective fall 2026, the tax rate charged on gross premiums for contracts of life insurance, accident insurance, and sickness insurance will increase to 4% from the current rate of 3.75%. Additionally, the tax rate on gross premiums for other types of insurance contracts will increase to 4.25% from the current rate of 4.00%.
Next Steps
For tailored tax and legal advice on how these measures affect you or your business, your own tax lawyers and accountants are best positioned to advise on these proposals. Your financial advisor can also assess the impact of these proposals on your personal finances or business affairs and show you ways to take advantage of their benefits or ease their impact, align your investments accordingly, and help coordinate the right specialist for your circumstances.
About the Author
The Tax, Retirement and Estate Planning (TREP) team is a specialized group of experienced legal, accounting and planning professionals dedicated to providing the tax, retirement and estate planning insight and expertise that advisors need in order to better serve their clients. As your trusted partner in planning, our TREP team is committed to exploring important issues and commentary on these matters through articles, presentations and other means.
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