Canada Corporate Tax Rates 2025

For 2025, Canadian corporate tax rates consist of federal and provincial components. CCPCs (Canadian-Controlled Private Corporations) pay 9% federal tax on small business income up to $500,000, plus provincial rates ranging from 0% to 3.2%. General corporate income is taxed at 15% federally plus 8% to 16% provincially, depending on the province. Combined rates range from 9% to 31%.

The small business tax rate in Canada for CCPCs is 9% federally on active business income up to $500,000 (the small business deduction limit). Provincial rates vary significantly: Manitoba, Saskatchewan, and Yukon charge 0%, while most other provinces charge between 1% and 3.2%. Combined federal and provincial rates range from 9% (in Manitoba, Saskatchewan, Yukon) to 12.2% (in Ontario and Quebec).

For small business income (CCPC with small business deduction), Manitoba, Saskatchewan, and Yukon have the lowest combined rates at 9% (0% provincial + 9% federal). For general corporate income, Alberta has one of the lowest combined rates at 23% (8% provincial + 15% federal). The choice depends on whether your corporation qualifies as a CCPC and your income level.

A CCPC (Canadian-Controlled Private Corporation) is a private corporation controlled by Canadian residents that qualifies for preferential tax treatment. CCPCs benefit from the small business deduction, paying only 9% federal tax (vs 15%) on the first $500,000 of active business income. They also have access to enhanced capital gains exemptions and the RDTOH system for investment income. General corporations pay flat rates on all income with no small business deduction.

CCPCs pay significantly higher rates on investment income: 38.67% federal plus provincial rates (typically 46-54% combined). This high rate includes a refundable portion (30.67% federal) through the RDTOH system that's refunded when dividends are paid. Capital gains are 50% taxable, with the taxable portion subject to these same investment income rates. General corporations pay their standard corporate rate (15% federal + provincial) on investment income.

The small business deduction (SBD) limit is $500,000 federally for most provinces and territories, though Saskatchewan has a higher limit of $600,000. This is the maximum amount of active business income eligible for the reduced 9% federal rate. The limit can be reduced if the corporation has significant investment income (passive income over $50,000) or taxable capital over $10 million. Associated corporations must share the limit.

Ontario charges 3.2% on small business income (CCPC) and 11.5% on general corporate income. Combined with federal rates, Ontario CCPCs pay 12.2% on small business income up to $500,000 and 26.5% on general income. This is close to the national average - Ontario's rates are middle-of-the-pack, neither the lowest nor highest in Canada.

No, different rates apply to different income types for CCPCs. Active business income qualifies for small business rates if under the $500,000 threshold. Investment income (interest, dividends, rental income not related to active business) faces much higher rates (46-54%). Capital gains are 50% taxable at investment income rates. General corporations pay their flat rate on all income types without these distinctions.