Bill 23: An Act to Amend Income Tax Act

The new 20% tax bracket on income above $200,000 will directly affect high-earning sole proprietors, self-employed professionals, and owner-operators in Prince Edward Island who report business income personally — such as independent contractors, consultants, farmers, or small business owners who draw significant income through their own returns rather than a corporation. For these individuals, any taxable income they earn personally above $200,000 will now face a higher provincial rate starting January 1, 2026. The enhanced Island Essentials Benefit changes will primarily help lower-income islanders rather than businesses directly, though employers in retail, hospitality, and service industries may see modest downstream effects from increased purchasing power among lower-wage workers. Incorporated businesses are not directly affected by the personal income tax bracket change, but business owners who rely on pass-through personal income structures should review their compensation planning.