The 2025 tax changes you need to know before you file

For this week’s top story, we’re diving into the income tax changes Canadians can expect for filing their 2025 taxes.

The countdown to April 30 is officially on. And while the 2025 tax year was marked by a shift in federal leadership, the tax changes aren’t “bombshells”; they’re more like changes to the fine print. 

“Due to the late budget in 2025,” says Jason Heath, CFP and managing director of Objective Financial Partners, “there were not many tax changes that apply for the 2025 tax year.” While the changes aren’t numerous, it’s still essential to be informed. I spoke with financial planners to break down the essential updates you need to ensure you “don’t leave money on the table” this spring.

1. Introduction of the middle-class tax cuts

On July 1, 2025, the federal tax rate for the lowest tax bracket dropped from 15% to 14%. The lowest bracket applies to income earned at or below a threshold of $57,375. This tax cut, often called the middle-class tax cut, will affect about 22 million Canadians and is estimated to save individuals up to $420 per year. A two-income family is estimated to save up to $840 per year.

This tax cut happened at exactly mid-year, so the effective tax rate for 2025 for the lowest income bracket is 14.5%. In 2026, the rate will be 14%.

There is a small snag with this cut, though, because this tax rate affects some non-refundable tax credits like the basic personal amount, the tuition amount, and medical expenses. But if you’re affected by the change, don’t worry. “A temporary top-up tax credit (TUTC) from 2025 to 2030 will ensure that non-refundable tax credits benefit from the higher 15% tax savings rate,” says Heath.

2. CPP maximum contributions have increased

For the seventh straight year, Canada Pension Plan (CPP) contributions have increased. In 2019, the federal government started the CPP enhancement program, a plan to increase CPP payouts by 50% once mature. Unfortunately, this increase means that we need to contribute more, now.

Starting in 2019, the federal government raised CPP contribution rates annually, and 2025 was no exception. CPP has two earnings ceilings on which you make contributions. The first is the Year’s Maximum Pensionable Earnings (YMPE), which was $71,300 in 2025.

In 2024, the federal government introduced a second earnings ceiling, creatively called the Year’s Additional Maximum Pensionable Earnings (YAMPE). This extra threshold lets the plan collect additional CPP contributions, known as CPP2, from Canadians up to a ceiling of $81,200 in 2025.

3. The new disability tax credit was launched

The Canada Disability Benefit (CDB) is a new federal benefit for Canadians aged 18 to 64 with disabilities. This benefit began accepting applications in June 2025 and currently offers Canadians up to $2,400 annually based on adjusted family net income. 

To qualify, you must have filed a 2024 tax return and be certified to receive the disability tax credit (DTC). 

4. End of the digital news subscription tax credit

In 2025, you can no longer claim the digital news subscription tax credit. Previously, taxpayers could claim a 15% credit, up to $500, for subscriptions to qualified Canadian journalism organizations. That said, if you paid qualifying subscription expenses from 2020 to 2024 and haven’t claimed them yet, you can still do so on your 2025 taxes.

5. Canada Carbon Rebate discontinued

In March 2025, the federal government ended the Canada Carbon Rebate (CCR) and the federal fuel charge Canadians paid at the pump. The controversial rebate program made its final payment in April to Canadians who filed a 2024 tax return.

6. Tax brackets and RRSP contribution limits increase with inflation

There are a series of tax amounts that increase with inflation every year, so while these aren’t tax changes per se, they do impact your return. For example, federal income tax brackets increase with inflation each year, as does the basic personal amount (BPA).

The registered retirement savings plan (RRSP) annual contribution limit increases to $32,490. But remember, says personal finance expert Jessica Moorhouse, QAFP, the amount of RRSP contribution room you get each year is based on 18% of your earned income from the previous year. “In other words,” she says, “the more you earn, the more RRSP room you get.”

The contribution limits for the tax-free savings account (TFSA) and first-home savings account (FHSA) did not increase in 2025; they remain $7,000 and $8,000 per year, respectively.

What if I make a mistake when filing my 2025 tax return?

While these changes aren’t groundbreaking, it’s still possible to make an error on your tax return, if you rely on old information. If that happens, don’t panic. “A taxpayer can revise their tax return after the fact,” says Heath. “The CRA will generally allow an adjustment up to 10 years from the end of the tax year in question.”

Even minor tax changes can impact your bottom line, depending on your income level and eligibility for federal benefits. For this reason, it’s important to take the time to review these updates now and make sure you’re prepared to file by the April 30 deadline and claim every dollar you’re entitled to for the 2025 tax year.