Provincial Personal Income Tax
NEW – Operating Budget 2026 Proposes Changes to Income Taxes and Benefits
Provincial Operating Budget proposes changes to the personal income tax system including the introduction of the Island Essentials Benefit to replace the Sales Tax Credit, the addition of a new tax bracket, and an enhanced Child Benefit. These changes are subject to passage of Bill No 23 An Act to Amend the Income Tax Act by the Legislature of Prince Edward Island.
NEW Island Essentials Benefit
Beginning in July 2026, the proposed Island Essentials Benefit will replace the Sales Tax Credit, increasing annual benefit amounts up to $365 for couples and up to $310 for singles. All eligible Islanders will receive an Island Essentials Benefit of at least $175 to help offset the cost of essential household expenses.
This amount is combined with the quarterly payments of the federal GST/HST credit.
Have questions about the Island Essentials Benefit? Please see Frequently Asked Questions for more information.
Personal Income Tax and Changes
The Government of Prince Edward Island has been saving Islanders money by reducing income taxes in each provincial operating budget since 2019. Tax relief measures for 2026 will provide Islanders with additional savings this calendar year. Changes effective as of January 1, 2026 include raising the basic personal and spouse amounts and income threshold for the Low-income Tax Reduction along with increasing the tax bracket thresholds by 1.8%.
The 2026 basic personal amount has increased by nearly 64% since 2019 and the age amount for our seniors by 73% over the same time period. Additionally, a children’s wellness tax credit was introduced and the volunteer firefighter tax credit was doubled and extended to volunteer search and rescue personnel.
| 2019 | 2026 | % Change | |
| Basic personal amount | $9,160 | $15,000 | 63.8% |
| Spouse or common-law partner amount / Amount for eligible dependent: | |||
| - Maximum amount | $7,780 | $12,740 | 63.8% |
| Age amount | |||
| - Maximum amount | $3,764 | $6,510 | 73.0% |
| - Income threshold | $28,019 | $36,600 | 30.6% |
| Low-income tax reduction threshold | $17,000 | $23,000 | 35.3% |
| Children’s wellness tax credit | $0 | $1,000 | New |
| Volunteer firefighter and volunteer search and rescue credit | $500 | $1,000 | 100.0% |
New Tax Brackets
For the 2026 and future taxation years, taxable income exceeding $200,000 will be taxed at 20%.
This proposed change will build on the 2024 changes, where the three bracket plus a surtax system was replaced with a five-bracket system to improve transparency. In 2026, the income thresholds were increased by 1.8% compared to 2025, meaning taxes have come down for those income levels that need it most and everyone can earn more money before being moved to a higher tax bracket. Budget 2026 proposes a new bracket as shown in the table below.
| 2019-2023 | 2026 and future years | |||||
| From | To | Rate % | From | To | Rate % | |
| Up to $31,984 | 9.80% | Up to $33,928 | 9.50% | |||
| $31,984 to $63,969 | 13.80% | $33,928 to $65,820 | 13.47% | |||
| $63,969 to $104,000 | 16.70% | $65,820 to $106,890 | 16.60% | |||
| Over $104,000 (surtax) | 18.37% | $106,890 to $142,520 | 17.62% | |||
| $142,520 to $200,000 | 19.00% | |||||
| Over $200,000 | 20.00% | |||||
To file your personal income tax, please refer to the official forms provided by the Canada Revenue Agency (CRA). All necessary forms and publications can be downloaded directly from the CRA's website.
PEI Child Benefit
Budget 2026 proposes increasing the annual per child amounts by $50. Beginning January 2025, eligible families now receive a monthly amount per child. This provincial benefit is harmonized with the Canada Child Benefit and is delivered by CRA on behalf of the province.
| Adjusted Income |
Current Annual Amount per Child |
Proposed Annual Amount per Child (Beginning July 2026) |
| Less than $45,000 | $360 | $410 |
| $45,000 to $80,000 | $240 | $290 |
| Greater than $80,000 | $0 | $0 |
Children’s Wellness Tax Credit
Wellness is important to Islanders, especially in our children and youth. Knowing that organized activities can be expensive for families, a Children’s Wellness Tax Credit has been created to assist with these costs.
Since January 1, 2021, Islanders are able to claim a non-refundable wellness tax credit of up to $500 per child. Effective January 1, 2024 the amount is doubling to $1,000 per child. This tax credit is for all families with children under the age of 18 for eligible activities related to their children’s well-being. This higher amount can be claimed when completing their taxes, for the 2024 taxation year.
Receipts should be kept for activities during the year to claim this credit. Eligible activities could include sports, arts, cultural camps and activities for eight-weeks or five consecutive days of activity.
Additional information to assist Islanders claiming this credit can be found on Line 58365 of the PEI Income Tax return (PE428).
Prince Edward Island’s personal income tax is administered and collected by the federal government through the Canada Revenue Agency. PEI’s income tax rates and bracket structures are set by the Government of PEI and applied to federally defined PEI taxable income.
You do not need to provide your private details to be eligible for or to receive the Child or Island Essentials Benefits, you only need to file your income taxes with the Canada Revenue Agency. Please see Phishing 101 | Be Safe Online for helpful information.
For more information, the Prince Edward Island benefits programs delivered by CRA can be found on the Canada Revenue Agency website.
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Island Essentials BenefitEligible Islanders will receive this benefit and can choose to spend it on your priorities. |
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