Canadians can expect several key tax changes and relief measures in 2025, although most of these changes are anticipated to have only minor impacts on individuals. Here are the main points:
GST/HST Holiday
A temporary GST/HST holiday will be in effect from December 14, 2024, to February 15, 2025. During this period, the GST/HST will be fully relieved on specific items such as groceries, restaurant meals, snacks, children’s clothing, toys, and holiday gifts[2][3][4].
This measure is designed to provide temporary tax relief on essential goods during the holiday season.
Businesses selling eligible items will not charge GST/HST on these products, potentially increasing customer sales[2][3].
Federal Income Tax Brackets
For 2025, the federal income tax bracket thresholds will increase by 2.7% across all brackets. The new thresholds are:
0 to $57,375: Taxed at 15%
$57,376 to $114,750: Taxed at 20.5%
$114,751 to $177,882: Taxed at 26%
$177,883 to $253,414: Taxed at 29%
$253,415 and above: Taxed at 33%[1].
Capital Gains Tax
The capital gains tax inclusion rate has been increased from 50% to 66% on capital gains above $250,000 per year for individuals. This change is being enforced provisionally by the Canada Revenue Agency (CRA) and awaits parliamentary approval[1].
The Canadian Entrepreneurs’ Incentive reduces the inclusion rate from two-thirds to one-third on a lifetime maximum of $2 million in capital gains for business owners set up as Canadian Controlled Private Corporations. This incentive will be phased in over five years starting in 2025[1].
Canada Pension Plan (CPP) Contributions
The maximum CPP contributions will increase in 2025. The first ceiling is now $71,300, and the maximum contribution for an employee is $4,034.10. The employer pays a matching amount, making the total maximum contribution per employee $8,068.20. The second ceiling is $81,200, with additional contributions calculated at a lower rate of 4%[1].
Carbon Pricing
On April 1, 2025, the price on carbon will increase from $80 a tonne to $95 a tonne in provinces using the federal backstop. This will result in higher fuel charges, such as a rise in gasoline fuel charges to 20 cents a litre from the 2024 rate of 17 cents a litre[1].
General Tax Environment
According to Daniel Rogozynski of the University of Waterloo’s School of Accounting and Finance, 2025 will largely be a “status quo year” on the tax front, with minimal significant changes due to the government’s financial constraints[1].
