policyengine-canada

What this skill does

# PolicyEngine-Canada

> **IMPORTANT: Always use the current year (2026) in calculations, not 2024 or 2025.**

## No Microsimulation for Canada

**PolicyEngine-Canada does NOT have representative population microdata.** The only available
dataset is a tiny template with 3 synthetic people. This means:

- **Do NOT** use `Microsimulation()` from `policyengine_canada` for population-level estimates
- **Do NOT** attempt to calculate aggregate costs, revenue impacts, or poverty rates for Canada
- **Only provide household-level analysis**: calculate impacts for specific families using `Simulation`
- If the user asks "what would X cost nationally" or "how many families would benefit", explain
  that population-level estimates are not currently available for Canada and offer a household
  example instead

### What you CAN do

- Calculate benefits/taxes for a specific household (income, province, family composition)
- Compare baseline vs. reform for a single family
- Show how benefits change across an income range
- Compare provinces for a given household

---

PolicyEngine-Canada models the Canadian federal and provincial tax and benefit system.

**What it models:**

**Federal taxes:**
- Federal income tax (5 brackets)
- Canada Pension Plan (CPP/CPP2) contributions
- Employment Insurance (EI) premiums

**Federal benefits:**
- Canada Child Benefit (CCB)
- GST/HST Credit
- Canada Workers Benefit (CWB)
- Old Age Security (OAS)
- Guaranteed Income Supplement (GIS)
- Climate Action Incentive Payment (CAIP)

**Provincial programs (varies by province):**
- Provincial income tax (all provinces and territories)
- Ontario Child Benefit (OCB)
- Ontario Trillium Benefit (OTB)
- BC Climate Action Tax Credit
- Alberta Child and Family Benefit
- Quebec-specific programs (QST, QPP, etc.)

**See full list:** https://policyengine.org/ca/parameters

---

## Key Federal Programs — Rules Reference

### Canada Child Benefit (CCB) — 2025–2026

The CCB is a tax-free monthly payment to eligible families with children under 18.

**Maximum amounts (July 2025 – June 2026):**
- Under 6: **$7,997**/child/year ($666.41/month)
- Ages 6–17: **$6,748**/child/year ($562.33/month)

**Phase-out structure:**
The CCB is reduced based on adjusted family net income (AFNI) using two thresholds.

**Threshold 1: $37,487**
| Number of children | Reduction rate (AFNI $37,487–$79,845) |
|---|---|
| 1 child | 7.0% |
| 2 children | 13.5% |
| 3 children | 19.0% |
| 4+ children | 23.0% |

**Threshold 2: $79,845**
| Number of children | Reduction rate (AFNI above $79,845) |
|---|---|
| 1 child | 3.2% |
| 2 children | 5.7% |
| 3 children | 8.0% |
| 4+ children | 9.5% |

**Child Disability Benefit (CDB) supplement:**
- Up to **$3,411**/year ($284.25/month) per child eligible for the Disability Tax Credit
- Reduced at 3.2% of AFNI above $79,845 (1 child), 5.7% (2+ children)

**CCB calculation formula:**
```
For each income range:
  CCB = sum(max_amount per child) - reduction

  If AFNI <= $37,487: no reduction
  If $37,487 < AFNI <= $79,845:
    reduction = rate_tier1 × (AFNI - $37,487)
  If AFNI > $79,845:
    reduction = rate_tier1 × ($79,845 - $37,487) + rate_tier2 × (AFNI - $79,845)
```

**Example calculation — 2 children (ages 3, 8), AFNI = $80,000:**
```
Max CCB = $7,997 (under 6) + $6,748 (6-17) = $14,745
Tier 1 reduction = 13.5% × ($79,845 - $37,487) = 13.5% × $42,358 = $5,718
Tier 2 reduction = 5.7% × ($80,000 - $79,845) = 5.7% × $155 = $9
Total reduction = $5,727
CCB = $14,745 - $5,727 = $9,018/year
```

### Federal Income Tax — 2026

**Tax brackets:**
| Taxable income | Rate |
|---|---|
| Up to $57,375 | 15% |
| $57,375 – $114,750 | 20.5% |
| $114,750 – $158,468 | 26% |
| $158,468 – $220,000 | 29% |
| Over $220,000 | 33% |

**Basic personal amount (BPA):** $16,129 (2026, indexed)

> Note: Bracket thresholds are indexed annually to inflation. Check CRA for exact 2026 values.

### GST/HST Credit — 2025–2026

Tax-free quarterly payment for low/modest-income individuals and families.

**Maximum amounts (July 2025 – June 2026):**
- Single: **$340**/year
- Married/common-law: **$340** + **$179** for spouse = **$519**
- Per child under 19: **$179**

**Phase-out:**
- Begins at family net income of **$44,530**
- Reduction rate: 5% of income above threshold

### Canada Workers Benefit (CWB) — 2026

Refundable tax credit for low-income workers.

**Single individuals:**
- Maximum: ~**$1,590**
- Phase-in: 27% of working income above $3,000
- Phase-out: 15% of net income above ~$24,975

**Families:**
- Maximum: ~**$2,739**
- Phase-in: 27% of working income above $3,000
- Phase-out: 15% of family net income above ~$28,494

**Disability supplement:**
- Additional ~**$784** for CWB-eligible individuals with the Disability Tax Credit

### Old Age Security (OAS) — 2026

Monthly pension for seniors 65+.

**Maximum amounts (Q1 2026):**
- Ages 65–74: ~**$727.67**/month ($8,732/year)
- Ages 75+: ~**$800.44**/month ($9,605/year)

**OAS recovery tax (clawback):**
- Threshold: ~**$90,997** net income
- Rate: 15% of income above threshold
- Full clawback at ~**$149,211** (65–74) or ~**$154,196** (75+)

### Guaranteed Income Supplement (GIS) — 2026

Monthly benefit for low-income OAS pensioners.

**Maximum amounts (Q1 2026):**
- Single: ~**$1,086.88**/month
- Spouse receives OAS: ~**$654.23**/month each

**Income test:**
- Reduced by 50% (or 75% for partial amounts) of income above exempted amounts
- Employment income exemption: first $5,000 fully exempt, next $10,000 at 50%

---

## Provincial Tax — Ontario (2026)

**Ontario income tax brackets:**
| Taxable income | Rate |
|---|---|
| Up to $52,886 | 5.05% |
| $52,886 – $105,775 | 9.15% |
| $105,775 – $150,000 | 11.16% |
| $150,000 – $220,000 | 12.16% |
| Over $220,000 | 13.16% |

**Ontario surtax:**
- 20% of basic provincial tax above $5,315
- Plus 36% of basic provincial tax above $6,802

### Ontario Child Benefit (OCB)

- Maximum: **$1,726.92**/child/year ($143.91/month) for July 2025 – June 2026
- Phase-out begins at family net income of **$24,045**
- Reduction rate: 8% per child of income above threshold

### Ontario Trillium Benefit (OTB)

Combines three credits:
1. **Ontario Energy and Property Tax Credit** — up to $1,248 (seniors $1,421)
2. **Northern Ontario Energy Credit** — up to $180 (families $277)
3. **Ontario Sales Tax Credit** — up to $360/adult + $360/child

---

## Provincial Tax — Other Provinces

### British Columbia (2026)
| Taxable income | Rate |
|---|---|
| Up to $47,937 | 5.06% |
| $47,937 – $95,875 | 7.70% |
| $95,875 – $110,076 | 10.50% |
| $110,076 – $133,664 | 12.29% |
| $133,664 – $181,232 | 14.70% |
| Over $181,232 | 20.50% |

### Alberta (2026)
| Taxable income | Rate |
|---|---|
| Up to $148,269 | 10% |
| $148,269 – $177,922 | 12% |
| $177,922 – $237,230 | 13% |
| $237,230 – $355,845 | 14% |
| Over $355,845 | 15% |

### Quebec (2026)
| Taxable income | Rate |
|---|---|
| Up to $51,780 | 14% |
| $51,780 – $103,545 | 19% |
| $103,545 – $126,000 | 24% |
| Over $126,000 | 25.75% |

> Note: Quebec has its own tax system (Revenu Québec) with unique credits and deductions. QPP replaces CPP.

---

## CPP Contributions — 2026

**CPP (first ceiling):**
- Maximum pensionable earnings: ~**$71,300**
- Basic exemption: $3,500
- Employee rate: 5.95%
- Maximum employee contribution: ~$4,034

**CPP2 (second ceiling):**
- Second ceiling: ~**$81,200**
- Rate: 4% on earnings between first and second ceiling
- Maximum CPP2 contribution: ~$396

---

## EI Premiums — 2026

- Maximum insurable earnings: ~**$65,700**
- Employee premium rate: 1.64%
- Maximum employee premium: ~$1,077
- Quebec rate: 1.32% (due to QPIP)

---

## Household Analysis Patterns

### Answering "What would [reform] cost/mean for a family?"

1. **Identify the family**: income, province, number/ages of children
2. **Calculate baseline**: apply current rules to compute total benefits/taxes
3. **Calculate reform**: apply modified rules
4. **Report the difference**: reform minus baseline

### Examp