Glossary

Inclusion Rate

The inclusion rate is the percentage of a capital gain that must be included in a taxpayer's taxable income. In Canada, only a portion of a capital gain is subject to income tax — the remainder is tax-free.

The current capital gains inclusion rate for individuals is 50%, meaning that half of a realized capital gain is added to taxable income and taxed at the taxpayer's marginal rate. A proposed increase to a two-thirds (66.67%) inclusion rate announced in the 2024 federal budget was permanently cancelled on March 21, 2025, and never took effect. The 50% rate remains in force.

At Ontario's top marginal rate of approximately 53.5%, the effective tax rate on a capital gain for an individual is roughly 26.75% (50% × 53.5%). The Lifetime Capital Gains Exemption (LCGE) shelters up to $1,275,000 of qualifying capital gains from this tax entirely in 2026.