Canada vs United States taxes (2026): income, company tax and CGT

Canada vs United States tax rates at a glance

Tax	🇨🇦 Canada	🇺🇸 United States
Income tax	Personal income tax: 14% - 54.8% Federal bracket 1: 14% Federal bracket 2: 20.5% Federal bracket 3: 26% Federal bracket 4: 29% Federal bracket 5: 33% Combined top marginal rate: About 44.5% - 54.8%	Personal income tax: 10% - 37% Social Security: 6.2% Medicare: 1.45% Additional Medicare: 0.9% State income tax: Varies
Corporate tax	Corporate tax: 23% - 30% Federal general corporate tax: 15% Federal CCPC small-business rate: 9% Alberta general corporate tax: 8% Alberta small-business tax: 2% Large-group minimum tax: 15%	C corporation tax: 21% CAMT: 15% Pass-through entities: Different State tax: Varies
Capital gains tax	Capital gains tax: 50% inclusion General capital-gains inclusion: 50% Tax on the included amount: Marginal rates Principal residence: Potential exemption Lifetime capital gains exemption: Indexed from $1.25m	Long-term capital gains: 0% - 20% Short-term capital gains: 10% - 37% Qualified dividends: 0% - 20% NIIT: 3.8%
Dividend tax	Dividend tax: Integrated Eligible dividend gross-up: 38% Non-eligible dividend gross-up: 15% Resident dividend tax: Marginal rates after credits Non-resident domestic withholding: 25%	Qualified dividends: 0% - 20% Ordinary dividends: 10% - 37% NIIT: 3.8% State tax: Varies
Wealth tax	Wealth tax: 0% General net wealth tax: 0% Federal Underused Housing Tax: 1% for 2022 - 2024 Municipal property tax: Local rates Capital-gains inclusion: 50%	Net wealth tax: 0% Property tax: Varies Estate tax: Up to 40% Gift tax: Up to 40%
Inheritance / estate tax	Inheritance tax: 0% Federal inheritance tax: 0% Tax on deemed capital gains: 50% inclusion Spouse or partner transfer: Potential rollover Probate or estate administration: Provincial rates	Federal inheritance tax: 0% Federal estate tax: Up to 40% Federal gift tax: Up to 40% Basic exclusion: $15,000,000
VAT / GST / sales tax	GST/HST: 5% - 15%	Sales tax: Varies by state
Other key taxes	Combined top personal marginal rate: About 44.5% - 54.8% Federal CCPC small-business rate: 9% Capital-gains inclusion rate: 50% Non-resident Part XIII withholding: 25%	None listed on country overview

Who wins on each tax

Personal income taxUnited States

The US federal top rate is 37%, though state income tax and payroll taxes can narrow the gap.

Corporate taxUnited States

US C corporations pay 21% federal tax before state taxes; Canada adds provincial corporate tax to its 15% federal rate.

Capital gains taxCanada

Canada generally includes 50% of gains in income at federal and provincial rates, with principal-residence relief; US long-term gains are generally 0%, 15% or 20%, with 3.8% NIIT for applicable high earners, while short-term gains are ordinary income.

Estate planningCanada

Canada has no federal estate tax, but death normally triggers a deemed disposal; the US has federal estate and gift tax, and some states add their own estate or inheritance tax.

Market scaleUnited States

The United States offers a far larger domestic market and venture ecosystem.

The verdict

The United States is often lighter for high ordinary income before state tax, with a 37% federal top rate versus Canada's combined federal-provincial range.

Canada's 50% capital-gains inclusion can be attractive, but departure tax and provincial residence make a move more consequential than a rate-table comparison suggests.

Founders should model state and provincial tax, entity type and immigration status; neither system rewards a casual cross-border move.

How to read this comparison

The Canada-US corridor needs a full cross-border analysis: residency, departure rules and state or provincial tax are as important as the federal headline rate.

Frequently asked questions

Is Canada or the United States better for a founder?

The US generally has the larger market and a lower federal C-corporation rate. Canada can be attractive where capital-gains treatment, immigration and provincial incentives fit the business.