The start of a new year always brings updates from the Canada Revenue Agency (CRA), and 2026 is no exception. For Canadian nonprofits, staying ahead of payroll tax changes is not just about compliance; it's about protecting your mission and ensuring every dollar goes where it's needed most.
This guide breaks down the anticipated 2026 Canadian payroll tax changes and provides a clear action plan for your nonprofit organization.
Why 2026 is a Critical Year for Nonprofit Payroll?
While the core principles of payroll remain, the CRA regularly adjusts contribution limits, tax brackets, and reporting requirements. For nonprofits, these changes can be particularly challenging due to limited administrative resources and the complexity of managing both paid staff and contract workers.
The most significant changes expected for 2026 include:
1. New CPP and EI Contribution Limits
The Canada Pension Plan (CPP) and Employment Insurance (EI) maximum pensionable earnings are subject to annual adjustments. For 2026, expect the following:
- CPP: The maximum pensionable earnings (MPE) will likely increase, continuing the trend of the enhanced CPP program. This means both employers and employees will contribute more, which will impact your overall payroll budget.
- EI: The maximum insurable earnings (MIE) will also be adjusted. Nonprofits must ensure their payroll systems are updated to calculate these new maximum contributions accurately from the first pay period of the year.
2. Federal and Provincial Tax Bracket Adjustments
The basic personal amount (BPA) and other non-refundable tax credits are indexed to inflation. While these adjustments are often minor, they require an update to your payroll deduction formulas (TD1 forms).
Action Point: Ensure your payroll software or service provider has implemented the latest TD1 forms for 2026 before the first pay run in January.
3. Expanded T1044 Filing Requirements (The Compliance Watch)
A major area of focus for the CRA is the compliance of Not-for-Profit Organizations (NPOs). While not strictly a payroll tax change, new rules are being introduced that will expand the filing requirements for NPOs that previously did not have to file the T1044 Non-Profit Organization Information Return.
- The Change: New draft rules propose that NPOs with gross annual revenue above a certain threshold (or those with significant passive income) will have expanded reporting obligations.
- The Impact on Payroll: Increased scrutiny on overall financial reporting means your payroll records—including T4s, remittances, and documentation for contract workers—must be impeccable.
15 Must-Track Metrics & KPIs for Nonprofit Success
Your 3-Step Action Plan for 2026 Payroll Readiness
Step 1: Audit Your Payroll System and Service
If you use a payroll service, confirm in writing that they will implement all 2026 changes automatically. If you manage payroll in-house, you must manually update:
- CPP and EI maximums.
- Federal and provincial tax tables.
- Any new provincial payroll taxes (e.g., Employer Health Tax) that may apply to your region.
Step 2: Review Employee vs. Contractor Status
With increased CRA scrutiny on NPOs, the misclassification of employees as independent contractors remains a high-risk error.
Key Check: If the worker is integral to your mission, is directed by your organization, and uses your equipment, they are likely an employee. Review all contract workers now to avoid penalties.
Step 3: Standardize Your Documentation
Ensure all payroll documentation is easily accessible and standardized. This includes:
- Signed employment contracts.
- Completed 2026 TD1 forms.
- Records of all statutory remittances made to the CRA.
How Enkel Helps Your Nonprofit Navigate Payroll
Managing payroll changes can divert valuable time and resources away from your mission. Enkel specializes in providing compliant, standardized payroll services for Canadian nonprofits. We ensure all CRA updates, including the 2026 tax changes, are implemented accurately and on time, giving your team peace of mind and freeing them to focus on what matters most.
Learn more about Enkel's specialized nonprofit payroll services
