The Latest Tax Updates in Canada: What You Need to Know

As the Canadian tax landscape continues to evolve, it’s important for individuals, business owners, and financial professionals to stay informed about the latest changes. From updates to tax brackets to new credits and deductions, staying on top of these developments ensures you’re compliant and can take full advantage of any opportunities to optimize your tax situation.

Here’s a look at some of the most recent tax updates in Canada for 2025 and beyond—and what they mean for you.

1. Increase in the Basic Personal Amount

One of the most notable changes for individual taxpayers is the increase in the Basic Personal Amount (BPA), which is the amount you can earn before you start paying federal income tax. For the 2025 tax year, the Basic Personal Amount will rise to $16,480, up from $15,978 in 2024.

This means that individuals earning less than this amount will pay no federal income tax, and those earning just above this amount will see a slight reduction in their overall tax liability.

2. New Tax Brackets for High-Income Earners

Below are the new federal tax brackets for 2025:

• 14.5% up to $57,375, plus
• 20.5% over $57,375 up to $114,750, plus
• 26% over $114,750 up to $177,882, plus
• 29% over $177,882 up to $253,414, plus
• 33% over $253,414

3. Enhancements to the Canada Child Benefit (CCB)

The Canada Child Benefit (CCB) is a tax-free monthly payment provided to families with children under the age of 18. For 2025, the federal government has introduced an enhanced version of the CCB, with increased benefits for families in higher-income brackets.

4. Top-Up Tax Credit

A new temporary, non-refundable “Top-Up Tax Credit” was introduced for the 2025 to 2030 tax years to ensure individuals claiming large non-refundable tax credits (like medical or tuition expenses) do not lose credit value due to the lower 14% base tax rate.

5. Registered Plans and Benefit Limits

• RRSP Limits: The Registered Retirement Savings Plan (RRSP) contribution limit for the 2025 tax year is $32,490, up from $31,560 in 2024.
• Canada Disability Benefit: Applications for this new federal benefit for working-age Canadians (ages 18 to 64) with disabilities opened in June 2025, providing up to $2,400 per year.
• Home Buyers’ Plan (HBP): The withdrawal limit from an RRSP under the HBP increased to $60,000 (previously $35,000) for withdrawals made after April 16, 2024.

6. Payroll and Benefit Changes

• Canada Pension Plan (CPP): The Year’s Maximum Pensionable Earnings (YMPE) for 2025 is $71,300.
• A second earnings ceiling (YAMPE) of $81,200 applies for additional CPP2 contributions on earnings between these two amounts.
• Employment Insurance (EI): In 2025, maximum insurable earnings are $65,700, and the premium rate is $1.64 per $100.
• Canada Carbon Rebate (CCR): Due to the removal of federal pollution pricing as of April 1, 2025, final quarterly rebate payments were issued in April 2025. No CCR payments will be made for returns or adjustments filed after October 30, 2026.

7. Looking Ahead: 2026 and Beyond

The tax landscape will continue evolving:

• Full implementation of the 14% lowest federal rate will take place in 2026 and a new tax federal bracket:
  • 14% on the first $58,523 of taxable income
  • 20.5% on income over $58,523 up to $117,045
  • 26% on income over $117,045 up to $181,440
  • 29% on income over $181,440 up to $258,482
  • 33% on income over $258,482
• The deferred capital gains inclusion rate change will take effect in January 2026.
• Automatic CRA tax filing is expected to roll out in stages through 2028.

Conclusion: Stay Ahead with Professional Tax Advice

Navigating the ever-changing tax landscape in Canada can be challenging, especially as new policies and regulations come into effect. It’s essential for individuals and businesses to stay informed and adjust their tax strategies accordingly.

At Caledon Accounting, our team of accounting experts is here to help you stay ahead of the curve. Whether you’re an individual looking to optimize your personal tax situation or a business navigating new reporting requirements, we can provide tailored advice and strategies to minimize your tax burden and ensure compliance with all new regulations.

Contact us today to schedule a free consultation and ensure that you’re fully prepared for the latest changes in Canadian taxes.