Prince Edward Island provincial individual income tax.
Written by the OpenAccountants team. Written by the OpenAccountants team from the official sources it cites.
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PEI Surtax Calculation
Surtax = (Basic provincial tax − $12,500) × 10%
Calculate Taxable Income
Same as federal taxable income (Line 26000).
Apply PEI Bracket Rates
First $32,656 × 9.65%; $32,657 to $64,313 × 13.63%; $64,314 to $105,000 × 16.65%; Above $105,000 × 18%
Subtract Non-Refundable Tax Credits
Total credit amounts × 9.65% (lowest bracket rate).
Calculate Surtax
If basic provincial tax > $12,500: add 10% of excess.
Apply Low-Income Tax Reduction
Reduces or eliminates tax for low-income earners.
Net Provincial Tax
After surtax addition and credit reductions.
Apply Refundable Credits
Subtract Sales Tax Credit and other refundable amounts.
50% inclusion rate
50% inclusion rate for all capital gains; the proposed 66.67% increase and $250,000 threshold were cancelled March 21, 2025
Lifetime Capital Gains Exemption
$1,250,000
Combined top rate on capital gains (50% inclusion)
~25.5%
PEI Property Transfer Tax
When acquiring property in PEI, a Real Property Transfer Tax of 1% of the greater of purchase price or assessed value applies. This is not an income tax but relevant context for property investors -- it adds to cost base for CGT purposes.
NEVER apply other provincial rates to a PEI resident
NEVER apply other provincial rates to a PEI resident
NEVER separate HST into components for filing
NEVER separate HST into components for filing -- PEI uses harmonized HST
NEVER ignore the surtax calculation
NEVER ignore the surtax calculation for higher-income earners
NEVER claim PEI credits without confirming residency
NEVER claim PEI credits without confirming PEI residency on December 31
NEVER omit the surtax from the computation
NEVER omit the surtax from the computation -- it applies in addition to bracket rates
Prohibition 6
NEVER present tax calculations as definitive -- always label as estimated
Rendered from the canonical facts model. General reference only — confirm with a qualified professional before acting.
Quick Reference
| Field | Value |
|---|---|
| Province | Prince Edward Island (Canada) |
| Tax | Provincial Personal Income Tax |
| Currency | CAD only |
| Tax year | 1 January -- 31 December 2025 |
| Primary legislation | Income Tax Act (Prince Edward Island) |
| Tax authority | Canada Revenue Agency (administers on behalf of PEI) |
| Filing portal | CRA My Account / NETFILE / paper T1 |
| Filing deadline | 30 April 2026 (15 June 2026 if self-employed; balance due 30 April) |
| Skill version | 1.0 |
PEI Provincial Tax Rates (2025)
| Taxable Income (CAD) | Rate |
|---|---|
| 0 -- 32,656 | 9.65% |
| 32,657 -- 64,313 | 13.63% |
| 64,314 -- 105,000 | 16.65% |
| 105,001+ | 18% |
PEI Surtax
| Provincial Tax Threshold | Surtax Rate |
|---|---|
| Provincial basic tax > $12,500 | 10% of provincial tax exceeding $12,500 |
Key PEI Features
| Feature | Detail |
|---|---|
| Harmonized sales tax (HST) | 15% (5% federal + 10% provincial) |
| Basic personal amount (2025) | $13,500 |
| Spousal/equivalent amount | $13,500 |
| Age amount | $4,959 |
| PEI Low-Income Tax Reduction | Reduces/eliminates tax for low-income residents |
| PEI Sales Tax Credit | $110/adult; income-tested |
| PEI Volunteer Firefighter Credit | $500 |
Combined Federal + PEI Marginal Rates (2025)
| Taxable Income (CAD) | Combined Rate |
|---|---|
| 0 -- 32,656 | 24.65% |
| 32,657 -- 57,375 | 28.63% |
| 57,376 -- 64,313 | 34.13% |
| 64,314 -- 105,000 | 37.15% |
| 105,001 -- 114,750 | 38.5% |
| 114,751 -- 158,468 | 44% |
| 158,469 -- 220,000 | 47% |
| 220,001+ | 51% |
Note: rates above do not include surtax effect. With surtax, effective top rate increases by approximately 1.8%.
Conservative Defaults
| Ambiguity | Default |
|---|---|
| Unknown residency province on Dec 31 | Do not compute -- confirm province |
| Unknown marital/family status | Single, no dependants |
T1 Structure
| Schedule | Purpose |
|---|---|
| T1 General | Federal return |
| Form PE428 | PEI Tax and Credits |
| Form PE479 | PEI Credits (refundable) |
Provincial Non-Refundable Credits (Form PE428)
| Credit | Amount (2025) | Rate |
|---|---|---|
| Basic personal amount | $13,500 | 9.65% |
| Spousal / common-law partner | $13,500 | 9.65% |
| CPP/EI contributions | Actual | 9.65% |
| Age amount | $4,959 | 9.65% |
| Pension income | Up to $1,000 | 9.65% |
| Disability | $8,777 | 9.65% |
| Tuition | Actual | 9.65% |
| Medical expenses | Excess over 3% of net income | 9.65% |
| Donations | First $200 at 9.65%; excess at 18% | Non-refundable |
| Volunteer firefighter | $500 | 9.65% |
PEI Refundable Credits (Form PE479)
| Credit | Detail |
|---|---|
| PEI Sales Tax Credit | $110/adult; income-tested; phases out above $30,000 (single) |
| Low-Income Tax Reduction | Eliminates/reduces tax for incomes below ~$20,000 |
| Seniors Independence Initiative | Home care/modification assistance (not a tax credit per se) |
| Community Development Equity Tax Credit | 35% of eligible investment |
HST Considerations
| Item | Detail |
|---|---|
| HST rate | 15% (5% federal + 10% provincial) |
| HST registrant | Full ITC available for business purchases |
| Small supplier threshold | $30,000 in 4 consecutive quarters |
| Real property (new residential) | Provincial new housing rebate available |
PEI Dividend Tax Credit
| Dividend Type | Federal Gross-Up | PE Credit Rate |
|---|---|---|
| Eligible dividends (public corps) | 38% gross-up | 10.5% of taxable amount |
| Non-eligible dividends (CCPCs) | 15% gross-up | 1.8% of taxable amount |
Filing Deadlines and Instalments
| Item | Detail |
|---|---|
| Filing deadline | 30 April 2026 (self-employed: 15 June 2026) |
| Balance due | 30 April 2026 regardless of filing deadline |
| Instalment threshold | Net tax owing > $3,000 in current year AND either of prior 2 years |
| Instalment schedule | Quarterly: March 15, June 15, September 15, December 15 |
| Interest on late balance | Prescribed rate (compounded daily) |
The surtax is unique to PEI among Atlantic provinces. It effectively creates a higher marginal rate for high-income earners:
PEI Surtax Impact
| Basic Provincial Tax | Effective Surtax | Total Effective Top Rate |
|---|---|---|
| $12,500 or less | None | 18% (top bracket only) |
| $15,000 | ($15,000 - $12,500) × 10% = $250 | ~18.2% effective |
| $20,000 | ($20,000 - $12,500) × 10% = $750 | ~18.5% effective |
| $30,000+ | Significant | ~19.8% effective on top bracket |
PEI has significant seasonal employment (fishing, tourism, agriculture). Workers may have:
PEI has a small population (~170,000) -- fewer provincial-specific programs compared to larger provinces. Federal credits (GST/HST credit, Canada Workers Benefit) are particularly important for low-income PEI residents.
Workers commuting to Nova Scotia or New Brunswick for employment are taxed as PEI residents if resident on Dec 31 in PEI. No provincial tax allocation for employment income earned in other provinces.
Community Development Equity Tax Credit
| Element | Detail |
|---|---|
| Credit rate | 35% of eligible investment |
| Maximum investment | $20,000/year |
| Maximum credit | $7,000/year |
| Eligible businesses | PEI-based community development corporations |
| Hold period | 5 years minimum |
| Carry-forward | 4 years |
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