Tax Tidbits: CPP, Vehicle Allowances and Other Updates

Several shorter tax developments this quarter may be relevant to employers, employees, business owners and individuals with cross-border obligations.

Proposed CPP Contribution Reduction

The federal government has proposed reducing the base Canada Pension Plan contribution rate from 9.9% to 9.5%, effective January 1, 2027.

For an employee earning approximately $70,000, the change would reduce annual CPP contributions by about $133 for both the employee and employer.

2026 Automobile Allowance Rates

For 2026, the maximum deductible allowance an employer can pay an employee for using a personal vehicle for business purposes has increased by one cent per kilometre.

• 73 cents per kilometre for the first 5,000 kilometres driven.
• 67 cents per kilometre for each additional kilometre.

Immediate Expensing for Greenhouses

The federal government has proposed allowing 100% immediate expensing for greenhouses, retroactive to November 4, 2025.

U.S. Citizenship Renunciation Fee Reduced

U.S. citizens are generally required to report their worldwide income on U.S. personal tax returns even when they do not live in the United States.

As of April 13, 2026, the fee to renounce U.S. citizenship was reduced from US$2,350 to US$450.