Prince Edward Island Provincial Budget Tax Updates 2026-2027

April 17, 2026
11:11 am

Overview

On April 14th, 2026, Prince Edward Island’s Finance Minister presented the province’s 2026-2027 budget. This comprehensive summary highlights some of the key changes that will influence the province’s tax environment in the coming years.

Personal Income Tax Measures

The Budget introduces a new personal income tax bracket on taxable income over $200,000, effective January 1, 2027.

For 2026 and 2027 taxation years, personal income tax rates based on taxable income levels are as follows:

	Rates
Taxable income	2026	2027
$33,928 or less	9.50%	9.50%
Over $33,928 up to $65,820	13.47%	13.47%
Over $65,820 up to $106,890	16.60%	16.60%
Over $106,890 up to $142,520	17.62%	17.62%
Over $142,520 up to $200,000	19.00%	19.00%
Over $200,000	19.00%	20.00%

The 2026 and 2027 personal combined income tax rates for top marginal tax rates are outlined below:

Personal Combined top marginal rates
Type of income	2026	2027
Interest/regular income	52.00%	53.00%
Capital gains	26.00%	26.50%
Eligible dividends	36.54%	37.92%
Non‑eligible dividends	47.92%	49.07%

Corporate Income Tax Measures

There are no proposed changes to corporate income tax rates or the $600,000 provincial small-business limit for 2026.

The corporate income tax rates for Prince Edward Island in 2026 are as follows:

	Provincial tax rate	Federal and provincial combined tax rate^{^[1]}
Small-business tax rate	1.00%	10.00% / 16.00%^[2]
Manufacturing and processing tax rate	15.00%	30.00%
General corporate tax rate	15.00%	30.00%

Other Tax Measures

Increase of the Real Property Tax for Non-Residents

Effective for the 2026 calendar year, the Budget proposes to increase the real property tax rate for non-residents from $1.50 to $1.70 per $100 of taxable value assessment. The Budget also introduces a new tax credit of $0.20 per $100 of taxable value assessment for non-resident apartment owners.

Increase of the Insurance Premium Tax

Effective in Fall 2026, the Budget proposes to increase the insurance premium tax rate on gross premiums on contracts of life insurance, accident insurance and sickness insurance from 3.75% to 4.00%. For other types of insurance, the applicable rate will increase from 4.00% to 4.25%.

For further information, visit Prince Edward Island Provincial Budget.

[1] Federal corporate income tax rates on qualifying zero-emission technology manufacturing profits are temporarily reduced by 50%, lowering the general rate to 7.5% (from 15%) and the Canadian-controlled private corporations (CCPCs) rate to 4.5% (from 9%), for taxation years from 2022 through 2031. These reduced rates will then be gradually phased out for taxation years beginning in 2032 through 2034.

[2] Effective July 1, 2025, the provincial small-business tax rate applies to the first $600,000 of active business income earned by CCPCs. As the federal small-business rate continues to apply only to the first $500,000, active business income between $500,000 and $600,000 is subject to a combined federal and provincial tax rate of 16.00% (i.e. 15% federal rate and 1% provincial rate).

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.