Tax Lines to Look Out For on Your 2025 Canadian Tax Return

The deadline for filing your 2025 income tax return is April 30, 2026. With several changes this year, from a lower federal tax rate to new benefits and eliminated credits, it pays to know what has changed before you file. This guide covers the key updates, deductions, and credits separated into sections for Individuals and Families, and Self-Employed Individuals.

For Individuals and Families

Federal Tax Rate Reduction

Effective July 1, 2025, under draft legislation introduced May 27, 2025, the lowest federal income tax rate was reduced from 15% to 14%. Because this change took effect halfway through the year, the blended rate for 2025 is 14.5%. This applies to the first $57,375 of taxable income and could save an individual up to $420 per year, or up to $840 for a two-income household.

Because the lowest rate also determines the value of most non-refundable tax credits, the government introduced a new top-up credit. This credit restores the full 15% value on eligible non-refundable credits claimed on amounts above $57,375, so the rate cut does not reduce the value of credits like the Basic Personal Amount, medical expenses, or tuition. This top-up credit will remain in place through the 2030 tax year.

Basic Personal Amount (BPA)

For 2025, the Basic Personal Amount has increased to $16,129 for taxpayers with net income up to $177,882. For those with net incomes above this amount, the BPA is gradually reduced, reaching a minimum of $14,538 at incomes of $253,414 or higher.

Capital Gains

The proposed increase in the capital gains inclusion rate from 50% to 66.67% on gains over $250,000 for individuals (and on all gains for corporations and most trusts) has been cancelled. The inclusion rate remains at 50% for all taxpayers. However, the lifetime capital gains exemption has been raised to $1,250,000 for qualifying dispositions of small business shares and farming or fishing property, up from $1,016,836.

Canada Disability Benefit

A new benefit became available in June 2025, providing up to $200 per month ($2,400 per year) for Canadian residents aged 18 to 64 who are approved for the Disability Tax Credit.

The benefit is income-tested, with the maximum amount generally available to single individuals with adjusted family net income of $23,000 or less. For couples, the threshold is higher (generally $32,500 after a working income exemption).

The benefit is gradually reduced as income increases. For single individuals, it is typically reduced by 20 cents for each dollar above the threshold. For couples, the reduction may be 20% or split at 10% each, depending on whether one or both partners qualify for the benefit.

What Has Been Eliminated

Canadian Journalism Tax Credit: The 15% non-refundable tax credit for qualifying digital news subscriptions (up to $75 per year) is no longer available for 2025.

Home Accessibility and Medical Expense Double-Claim: Under proposed measures announced in Budget 2025 and included in Bill C-15, 2025 is expected to be the final year that certain expenses qualifying for the Home Accessibility Tax Credit can also be claimed as a medical expense. Starting in 2026, these expenses will generally need to be claimed under only one provision and cannot be double-counted. Individuals planning eligible renovations may wish to take advantage of the current rules before this change takes effect.

Alternative Minimum Tax (AMT)

The updated AMT rules that took effect in 2024 continue to apply. These include a higher minimum tax rate, modified calculation for adjusted taxable income affecting foreign tax credits and minimum tax carryovers, and limited value on most non-refundable tax credits.

Popular Tax Credits and Deductions

Canada Training Credit (CTC) Eligible taxpayers aged 26 to 65 can claim this refundable tax credit to cover a portion of eligible tuition and fees for training or courses to enhance their skills.

Canada Caregiver Credit (CCC) This non-refundable tax credit supports individuals caring for family members or dependents with a physical or mental impairment. The amount varies based on the dependent’s relationship, net income, and circumstances.

Child Care Expenses Child care expenses, such as daycare, nursery schools, day camps, and boarding schools, are deductible if incurred to enable a parent or guardian to work, pursue education, or conduct research.

Disability Tax Credit (DTC) The DTC provides a non-refundable tax credit for individuals with disabilities or their caregivers to reduce the amount of income tax payable. For 2025, the disability amount is $10,138. Applicants must have a certified disability lasting at least 12 months. The expenses eligible for the disability supports deduction have also been expanded for 2025.

Moving Expenses Deductible moving expenses include transportation and storage costs, travel expenses, temporary living costs, and incidental expenses incurred when relocating at least 40 kilometers closer to a new work location, educational institution, or business location.

Interest Paid on Student Loans Interest paid on eligible student loans can be claimed as a non-refundable tax credit. The loans must be under federal, provincial, or territorial student loan programs.

Donations and Gifts Donations made to registered charities or other qualified organizations qualify for non-refundable federal and provincial tax credits. Typically, eligible amounts up to 75% of net income can be claimed. Note: due to the Canada Post strike in late 2024, eligible donations made in the first two months of 2025 can also be claimed on a 2024 return.

GST/HST Credit The GST/HST credit is a quarterly refundable payment designed to offset the impact of sales tax on low to moderate-income individuals and families. Eligibility is automatically assessed based on the annual tax return.

RRSP Contributions The maximum RRSP contribution for 2025 has increased to $32,490 (up from $31,560 in 2024), based on 18% of the previous year’s earned income. The TFSA annual contribution limit remains at $7,000 for 2025.

First Home Savings Account (FHSA) Contributions of up to $8,000 per year (lifetime limit of $40,000) are tax-deductible, grow tax-free, and qualifying withdrawals for a first home purchase are also tax-free. The FHSA can be used alongside the Home Buyers’ Plan, which maintains a withdrawal limit of $60,000.

For Self-Employed Individuals

CPP Contributions

Self-employed individuals pay both the employee and employer portions of CPP, for a combined rate of 11.90% on earnings up to the YMPE ($71,300). For CPP2, the self-employed rate is 8% on earnings between $71,300 and $81,200, with a maximum CPP2 contribution of $792.

Filing and Payment Deadlines

• Tax Return Deadline: June 15, 2026.

• Balance due must be paid by April 30, 2026.

Reporting Business Income

Report income on a calendar-year basis for sole proprietorships and partnerships.

Digital Platform Operators

Reporting rules require platform operators to collect and report seller information to the CRA. If income is earned through a digital platform, it is important to ensure it is properly reported.

Filing season for 2025 returns opens February 23, 2026. With a lower federal tax rate, increased contribution limits, and several eliminated credits and taxes, reviewing these changes before filing can help maximize savings and avoid surprises. The CRA is also no longer mailing paper tax packages, so returns and forms are available online at canada.ca or by calling 1-855-330-3305.

Sources

Canada Revenue Agency. “Personal income tax: What’s new for 2025.” – Canada.ca – https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/whats-new.html

Canada Revenue Agency. “Important changes to the 2025 income tax package.” – Canada.ca – https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2025/important-changes-2025-income-tax-package.html

Canada Revenue Agency. “Maximum Pensionable Earnings and Contributions for 2025.” – Canada.ca – https://www.canada.ca/en/revenue-agency/news/newsroom/tax-tips/tax-tips-2024/canada-revenue-agency-announces-maximum-pensionable-earnings-contributions-2025.html

Canada Revenue Agency. “Basic Personal Amount.” – Canada.ca – https://www.canada.ca/en/revenue-agency/programs/about-canada-revenue-agency-cra/federal-government-budgets/basic-personal-amount.html

Canada Revenue Agency. “Tax rates and income brackets for individuals.” – Canada.ca – https://www.canada.ca/en/revenue-agency/services/tax/individuals/frequently-asked-questions-individuals/canadian-income-tax-rates-individuals-current-previous-years.html

“Budget 2025 – Tax Measures” (Home Accessibility Tax Credit change) – https://budget.canada.ca/2025/report-rapport/tm-mf-en.html

This content is provided for general informational purposes only. It is not intended to provide investment, tax, or legal advice, and should not be relied upon as such.

Alberta’s 2026 provincial budget was tabled on February 26, 2026. The government projects a deficit of $4.1 billion for 2025–26, $9.4 billion for 2026–27, and $7.6 billion for 2027–28. The budget does not introduce any new personal or corporate income tax rate increases. However, it includes several targeted tax measures that affect households, property owners, and businesses.

Below is a summary of the main tax and levy changes.

Personal Income Tax Rates Remain Unchanged

The 2026 budget does not change Alberta’s personal income tax structure. Alberta’s existing six‑bracket system, with a bottom rate of 8% and a top rate of 15%, remains in place for 2026, with normal indexation applied to the bracket thresholds.

The budget does not change the way capital gains, eligible dividends, or non‑eligible dividends are taxed at the provincial level. No changes were announced to the basic personal amount or Alberta’s indexation policy for provincial income tax.

Corporate Income Tax Rates Remain the Same

The budget does not introduce changes to corporate income tax rates.

For 2026:

• The Alberta small business tax rate remains 2% on the first $500,000 of active business income.

• The general corporate tax rate remains 8%.

• The combined federal and Alberta corporate tax rate is about 11% for eligible small business income and about 23% for general active business income.

• There are no changes to the $500,000 small business limit.

Alberta Caregiver Credit Introduced for 2027

The budget introduces a new Alberta Caregiver Credit effective for the 2027 and subsequent tax years.

This credit will replace the existing caregiver credit and infirm dependent credit. It will be available to individuals who care for an eligible adult relative who is dependent due to a physical or mental infirmity, including an infirm spouse or common‑law partner.

The structure of the new credit is based on Alberta’s current caregiver‑related credits and is intended to align more closely with the federal Canada Caregiver Credit. Under the current framework for 2026, the underlying maximum caregiver‑related amount is $13,180, and the credit begins to be reduced when the dependant’s income exceeds $20,956. Both the credit base and the income thresholds will continue to be adjusted annually in accordance with Alberta’s indexation (escalator) policy starting in 2027.

The new credit will not be available for non‑infirm senior parents or grandparents who reside with the individual.

Vehicle Rental Tax Effective 2027

The budget introduces a new 6% tax on passenger vehicle rentals, effective January 1, 2027.

This tax applies to vehicles designed primarily to transport eight or fewer passengers. It will be calculated on the rental price, excluding federal GST. Itemized charges for insurance and fuel will also be excluded from the tax base.

Further legislative details are expected to be released later in 2026.

Tourism Levy Increase

The tourism levy rate will increase from 4% to 6% effective April 1, 2026.

The tourism levy applies to short‑term accommodation, including hotels, motels, and similar lodging providers. The levy is charged on the price of accommodation.

Education Property Tax Rate Increase

The 2026–27 budget increases education property tax rates as follows:

• Residential and farmland properties will increase to $2.84 per $1,000 of equalized assessment (up from $2.72).

• Non‑residential properties will increase to $4.17 per $1,000 of equalized assessment (up from $4.00).

These changes apply to the education portion of property tax collected through municipal property tax bills.

Data Centre Levy Clarification

The budget confirms amendments related to the data centre levy framework introduced in 2025.

The levy will apply at a rate of up to 2% of the value of computing equipment in large, grid‑connected data centres and co‑location facilities. A corresponding non‑refundable tax credit will be available to offset the levy against Alberta corporate income tax so that, once profitable, affected businesses can use the credit to reduce their net provincial corporate tax.

The government also intends to clarify that:

• The levy will effectively be calculated based on actual power consumption.

• Power not drawn from Alberta’s existing power grid will be eligible for a 0% levy rate.

Deficit Projections

The government projects:

• A $4.1 billion deficit for 2025–26.

• A $9.4 billion deficit for 2026–27.

• A $7.6 billion deficit for 2027–28.

The budget documents state that no new income taxes or income tax rate increases are being introduced as part of this fiscal plan.

Summary of Key Measures

For families:

• No change to personal income tax rates or the basic personal amount.

• New Alberta Caregiver Credit beginning in 2027, replacing existing caregiver‑related credits.

• Tourism levy increasing to 6% on short‑term accommodation.

• Higher education property tax rates on residential properties.

For business owners:

• No change to corporate tax rates.

• Small business rate remains 2% on the first $500,000 of active business income.

• Education property tax increase on non‑residential properties.

• New 6% vehicle rental tax starting in 2027.

• Clarification of data centre levy rules and corresponding corporate income tax credit.

The 2026 Alberta budget maintains existing income tax rates while introducing targeted changes to levies, property taxes, and tax credits.

If you would like to review how these updates affect your household or business situation, please don’t hesitate eto reach out.

Sources:

Alberta Budget 2026.” Government of Alberta, https://www.alberta.ca/budget.

This content is provided for general informational purposes only. It is not intended to provide investment, tax, or legal advice, and should not be relied upon as such.