Nova Scotia Provincial Budget Tax Updates 2026-2027

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February 26, 2026
1:42 pm

Overview

On February 23, 2026, Nova Scotia’s Finance Minister released the 2026-2027 budget entitled “Defending Nova Scotia”. This comprehensive summary will highlight the key changes that will influence Nova Scotia’s tax environment in the coming years.

Personal Income Tax Measures

The income tax rates for the 2026 taxation year, based on your taxable income, are as follows[1]:

Taxable income	Rate
$30,995 or less	8.79 %
Over $30,996 up to $61,991	14.95 %
Over $61,991 up to $97,417	16.67 %
Over $97,417 up to $157,124	17.50 %
Over $157,124	21.00 %

The current personal combined income tax rates for Nova Scotia top marginal tax rate effective January 1, 2026, remain as follows:

Taxable income above $258,482	Rate
Interest/regular income	54.00%
Capital gains	27.00%
Eligible dividends	41.58%
Non‑eligible dividends	49.99%

Personal Income Tax Indexation & Enhanced Tax Credits

Nova Scotia will continue its indexation policy introduced in 2025 and which affects the personal income tax brackets and basic non-refundable tax credits to inflation. The indexation rate for 2026 is 1.60% (3.10% for 2025). Personal basic non-refundable tax credits subject to indexation include:

The Basic Personal Amount (BPA)
The Spouse or Common-law partner Amount
The Amount for an Eligible Dependant
The Age Amount
The Amount for Infirm Dependants aged 18 or older

The province is also extending the enhancements to the Basic Personal, Age, Spousal, and Eligible Dependent amounts to all tax filers.[2] Eligible taxpayers will therefore continue to receive the maximum amounts.

Corporate Income Tax Measures

There are no proposed changes to the corporate income tax rates for 2026. The corporate income tax rates for Nova Scotia in 2026 remain as follows:

	Provincial tax rate	Federal and provincial combined tax rate
Small-business tax rate	1.50%	10.50%[3]
Manufacturing and processing tax rate	14.00%	29.00%
General corporate tax rate	14.00%	29.00%

Capital Investment Tax Credit Extended

The province will extend the sunset date of the capital investment tax credit to December 31, 2035. The capital investment tax credit is a 25% refundable corporate tax credit applicable on the capital cost directly related to acquiring qualified property (e.g., buildings and equipment) for use in Nova Scotia.

Sales Tax Measures

Harmonized Sales Tax

There are no proposed changes to the provincial portion of the Harmonized Sales Tax (HST) rate of 9%. The combined HST rate remains 14%.

Other Tax Measures

Financial Institutions Capital Tax (“FICT”) increase

Effective for taxation years starting on or after November 1, 2026, the FICT tax rate will increase 2 percentage points to 6 per cent.

Vaping Product Tax Harmonization

Effective April 1, 2026, Nova Scotia will harmonize its vaping product tax with the federal regime under a Coordinated Vaping Product Taxation Agreement (CVPTA). The provincial duty will align with the federal rate ($1.12 per 2 ml/gr for the first 10 ml/gr and $1.12 per 10 ml/gr thereafter). The existing standalone provincial vaping tax will cease on March 31, 2026.

This transition shifts administration and enforcement to the federal, expanding compliance oversight to a larger pool of manufacturers, importers, and online suppliers, and is expected to increase provincial revenues.

New Electric and Hybrid Vehicle Levy

Effective October 1, 2026, Nova Scotia will introduce a new Electric and Hybrid Vehicle Levy that will apply upon the registration of an electric or hybrid vehicle and at each renewal thereafter (every two years):

• Fully electric vehicles will be subject to a $500 levy every two years

• Hybrid vehicles will be subject to a $250 levy every two years

This measure is intended to offset declining fuel tax revenues that support road infrastructure funding due to the lower contribution by electric and hybrid vehicles.

For further information, visit https://www.novascotia.ca/documents/budget-documents-2026-2027.

[1] Nova Scotia Department of Finance and Treasury Board, “Personal Income Tax Rates and Indexation,” Government of Nova Scotia, February 2026, Personal Income Tax Rates and Indexation.

[2] Effective for the 2025 and subsequent years, the province removed the reduction provision for eligible tax filers with taxable income above $25,000.

[3] Effective April 1st, 2025, it applies to the first $700,000 ($500,000 before 2025) of active taxable income of Canadian-Controlled Private Corporations (CCPCs) with taxable capital of less than $10 million and is phased out for CCPCs with taxable capital between $10 million and $50 million.

Contact Our Team Of Experts

This article was prepared by the individuals listed below. For further information on the above, we invite you to please reach out to Danny Guérin of Andersen Inc.