Canadian Income Tax Changes for 2025
The following is a summary of key personal income tax changes announced by the federal and provincial governments for the 2025 tax season. Please note that this list is not definitive and is subject to change.
1. Lowest Individual Income Tax Rate Reduction
The lowest marginal personal income tax rate will decrease from 15% to 14% effective July 1, 2025, resulting in an effective marginal rate of 14.5% for 2025.
2. Updated Personal Income Tax Brackets
Personal income levels used to calculate federal and provincial income tax have been revised.
3. Marital Status Changes
Individuals must notify the CRA of any change to their marital status by the end of the month following the change, as it affects eligibility for credits/benefits and income reporting.
4. Top-up Tax Credit
A new non-refundable top-up tax credit is introduced to preserve the 15% rate for certain non-refundable credits claimed on amounts exceeding the first income tax bracket threshold.
5. Canada Carbon Rebate (CCR) Wind-down
The federal fuel charge ended on April 1, 2025, with the final quarterly CCR payment in April 2025. If CCR payments for 2022, 2023, or 2024 were not received, tax returns must be filed or adjusted by October 30, 2026, to claim them.
6. Underused Housing Tax (UHT) Elimination
The UHT has been eliminated for 2025 and later tax years, removing the requirement to pay the tax or file UHT returns for those years. However, filing, payment, penalty, and interest requirements for tax years 2022 to 2024 remain in effect.
7. Fertility Expenses
This includes certain medical expenses for a surrogate mother or donor (sperm/ovum), which must be for goods and services provided entirely in Canada. Some provinces also allow a refundable tax credit in addition to the medical expense tax credit.
8. Manitoba – Homeowners Affordability Tax Credit
Manitoba has replaced the school tax credit for homeowners and the education property tax credit with the new homeowners affordability tax credit.
9. Manitoba – Rental Housing Construction Incentive
A new refundable rental housing construction incentive tax credit has been introduced by Manitoba. This credit can be claimed if a tax credit certificate is received from the minister responsible for administering the Manitoba Housing and Renewal Corporation Act for eligible rental unit construction that commenced after January 1, 2024.
10. Home Renovation Expenses
Both the federal government and certain provinces permit claims for home renovation expenses. Saskatchewan, New Brunswick, and British Columbia have their own programs. Saskatchewan offers a non-refundable tax credit for eligible home renovation expenses, while British Columbia allows claims for seniors or persons with disabilities, provided they meet specific eligibility criteria.
Posted on 23 December 2025