Key tax updates from Prince Edward Island’s 2026 budget
Prince Edward Island tabled its 2026-27 provincial budget on April 14, 2026. From a tax perspective, the budget includes relatively limited changes, highlighted by a new top personal income tax bracket effective 2027. Other key measures include an increase to the non-resident real property tax rate (2026 calendar year) and an increase to the insurance premium tax (effective fall 2026), as summarized below.
Personal income tax measures
New top bracket (effective 2027): Beginning in 2027, a new 20% provincial personal income tax bracket would apply to income over $200,000. As a result, the top combined federal–provincial marginal rate on ordinary income would be 53% in 2027 (2026: 52%).
The projected personal provincial income tax rates for 2027 would be as follows:
Taxable income — from | Taxable income — to | Rate |
$0 | $33,928 | 9.50% |
$33,929 | $65,820 | 13.47% |
$65,821 | $106,890 | 16.60% |
$106,891 | $142,520 | 17.62% |
$142,521 | $200,000 | 19.00% |
$200,001 | Above | 20.00% |
Business and corporate income tax measures
No corporate income tax rate changes were announced as part of the budget. The corporate rates in effect are as follows:
| Small business corporations | General corporations | |||
| Rate | Threshold | Non-M&P | M&P | |
| PEI | 1% | $600,000 | 15% | 15% |
| Combined federal and PEI | 10% | $500,000* | 30% | 30% |
*The federal tax rate applies up to $500,000 and the PEI rate applies up to $600,000.
Other tax and fee measures
Real property tax (non-residents): A rate increase of $0.20 per $100 of assessment is proposed for non-resident owners (to $1.70 per $100) for the 2026 calendar year. A corresponding credit for certain non-resident apartment owners may be available.
Insurance premium tax: A 0.25% increase is proposed. The new rates on insurance will be 4.00% on life/accident/sickness insurance and 4.25% on other insurance contracts, effective in fall 2026 (subject to implementing legislation).
What this means for you
PEI's 2026–27 budget introduces targeted measures that may affect individuals and businesses at different points across the next two years. High-income earners should begin planning for the new 20% top personal income tax bracket, effective 2027, which raises the top combined marginal rate to 53%. Non-resident property owners will face an increased real property tax rate for the 2026 calendar year, and businesses should factor in the insurance premium tax increase expected in fall 2026.
If you have questions about how PEI's 2026–27 budget may affect you or your business, your Baker Tilly advisor can help you evaluate the potential impacts and identify planning opportunities. Connect with us to discuss your specific circumstances.
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