Prince Edward Island Budget 2026

The province introduces a new personal income tax bracket for earnings above $200,000 and raises real property tax rates for non-residents as well as insurance premium tax rates.

PEI Budget 2026 revises the projected 2025-26 deficit to $450 million based on the final forecast, compared to the $184 million deficit originally projected for the 2025-26 fiscal year. 

Fiscal projections for the next three years are as follows:

Business tax measures

Corporate tax rates

There are no changes to PEI’s corporate tax rates or small business threshold. The small business threshold refers to the maximum amount of active business income eligible for the small business corporate tax rate. PEI’s small business threshold has been $600,000 since July 1, 2025, while the federal small business threshold remains at $500,000.    

Combined federal and provincial corporate tax rates

Personal tax measures

Personal income tax rates

PEI Budget 2026 introduces a new personal income tax bracket, effective January 1, 2027. An individual’s taxable income exceeding $200,000 will be subject to provincial income tax at a rate of 20% (an increase from the current top provincial rate of 19%). 

The PEI personal tax brackets and corresponding marginal rates for 2027 will be as follows (compared to 2026): 

The top combined federal and provincial marginal tax rates for 2027 are expected to be as follows (compared to 2026):

For 2026, the combined federal and provincial personal tax brackets and the respective marginal tax rates at each income bracket continues to be as follows:

As previously announced, the provincial basic personal amount is increased to $15,000 (from $14,650), effective January 1, 2026.

Other notable measures

Real property tax

PEI Budget 2026 increases the real property tax rate for non-residents of the province to $1.7 (from $1.5) per $100 of taxable value assessment. These changes will apply beginning in the 2026 calendar year. Non-resident apartment owners may be eligible for a provincial tax credit of $0.2 per $100 of taxable value assessment. 

Insurance premium tax

The budget increases the insurance premium tax rates applied to gross premiums on insurance contracts to 4% (from 3.75%) on life insurance, accident insurance, and sickness insurance. All other insurance will also increase to 4.25% (from 4%). These changes are proposed to come into effect during the fall of 2026.

Have questions? Let’s talk. Contact your local advisor or reach out to us here. 

Visit our Budget 2026 hub to learn more about all federal and provincial budgets.

Disclaimer

_{The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.}