On 14 April 2026, Prince Edward Island Finance Minister Jill Burridge (the Minister) tabled the province's fiscal 2026 budget. The budget contains tax measures affecting individuals and corporations.

The Minister anticipates a deficit of CA$449.6m for 2025-26 and projects a deficit of CA$410m for 2026-27, followed by further deficits for each of the following two years (CA$386.2m for 2027-28 and CA$338m for 2028-29).

Following is a brief summary of the key tax measures.

Business tax measures

Corporate income tax rates

No changes are proposed to the corporate income tax rates or the CA$600,000 small-business limit.

Prince Edward Island's 2026 corporate income tax rates are summarized in Table A.

Table A — 2026 Prince Edward Island (PEI) corporate income tax rates¹

¹ The rates represent calendar-year-end rates, unless otherwise indicated.

² The federal corporate income tax rates for manufacturers of qualifying zero-emission technology are reduced to 7.5% for eligible income otherwise subject to the 15% federal general corporate income tax rate or 4.5% for eligible income otherwise subject to the 9% federal small-business corporate income tax rate. These reductions are not reflected in the combined federal and Prince Edward Island rates above.

³ Ibid.

⁴ An additional tax applies to banks and life insurers at a rate of 1.5% on taxable income (subject to a CA$100m exemption to be shared by group members).

Personal tax

Personal income tax rates

The Minister proposes to add a new personal income tax bracket (for taxable income exceeding CA$200,000) beginning in 2027 as outlined in Table B.

Table B — 2026 and 2027 Prince Edward Island personal income tax rates

¹ Individuals resident in Prince Edward Island on 31 December 2026 with taxable income up to CA$18,684 pay no provincial income tax as a result of a low-income tax reduction. The low-income tax reduction is clawed back for income exceeding CA$23,000 until the reduction is eliminated, resulting in an additional 5% of provincial tax on income between CA$23,001 and CA$30,000.

As a result of the proposed new income tax bracket, the combined top marginal 2027 federal-Prince Edward Island personal income tax rates will be 53% for ordinary income, 37.92% for eligible dividends and 49.07% for non-eligible dividends (assuming no changes to the top federal rate will be announced for 2027).

For taxable income exceeding CA$142,250, the 2026 combined federal-Prince Edward Island personal income tax rates are outlined in Table C.

Table C — Combined 2026 federal and Prince Edward Island personal income tax rates

¹ The rate on capital gains is one-half the ordinary income tax rate.

² The federal basic personal amount comprises two elements: the base amount (CA$14,829 for 2026) and an additional amount (CA$1,623 for 2026). The additional amount is reduced for individuals with net income exceeding CA$181,440 and is fully eliminated for individuals with net income exceeding CA$258,482. Consequently, the additional amount is clawed back on net income exceeding CA$181,440 until the additional tax credit of CA$227 is eliminated; this results in additional federal income tax (e.g., 0.29% on ordinary income) on net income between CA$181,441 and CA$258,482.

Other tax measures

Property tax

Effective for 2026, the budget proposes to increase the real property tax rate for nonresidents from CA$1.50 to CA$1.70 per CA$100 of taxable assessed value. A tax credit equivalent to this rate increase of CA$0.20 is proposed to be provided to nonresident apartment owners.

Insurance premium tax

Effective for fall 2026, the budget proposes to increase the insurance premium tax rates by 0.25 percentage points to 4.00% for life insurance, accident insurance and sickness insurance, and to 4.25% for other insurance.

For up-to-date information on the federal, provincial and territorial budgets, visit ey.com/ca/Budget.