Did the government cancel the proposed increase in the capital gains inclusion rate in Canada?

This answer covers Canadian federal tax law, which applies in every province.

Yes. The proposed increase in the capital gains inclusion rate was cancelled, and Finance Canada says the government confirmed in Budget 2025 that it would not proceed. The CRA's corporations page also says the proposed increase was later cancelled.

The 2024 proposal would have raised the rate from one-half to two-thirds, for individuals on annual gains above $250,000 and for corporations and most trusts on all gains. It was first set for June 25, 2024, then deferred to dispositions on or after January 1, 2026. The deferral was announced on January 31, 2025.

Because the increase never took effect, the one-half rate applies to gains realized in 2024, 2025 and 2026. The CRA reversed the two-thirds rate for corporations that had filed on the September 2024 basis through corrective reassessments, and it gave late-filing penalty and interest relief to T1 and T3 filers. Exception: the Lifetime Capital Gains Exemption increase to $1.25 million was not cancelled. If you filed on the two-thirds basis, a lawyer or accountant can confirm your position.