The Canada Revenue Agency (CRA) has introduced significant tax changes for 2025, with personal income tax rates ranging from 15% to 33%, alongside revised deductions and a new capital gains inclusion rate.
These updates will affect millions of Canadians—whether you’re employed, retired, or investing.
From reduced tax rates to increased savings for families, this article breaks down everything you need to know about the new CRA updates and how they may influence your finances, lifestyle, and take-home pay.
New CRA Tax Brackets for 2025
The CRA has adjusted the federal tax brackets for the 2025 tax year. Below is the updated structure:
| Taxable Income Range (CAD) | New Tax Rate |
|---|---|
| Up to $55,867 | 15% |
| $55,868 to $111,733 | 20.5% |
| $111,734 to $173,205 | 26% |
| $173,206 to $246,752 | 29% |
| Over $246,752 | 33% |
Key Basic Personal Amounts:
- Up to $173,205 income: Tax-free up to $15,705
- Above $246,752 income: Reduced to $14,156
- Gradual adjustments for income levels in between
These changes aim to put more money in the pockets of low- and middle-income Canadians starting July 1, 2025.
Capital Gains Inclusion Rate Increase
One of the biggest tax reforms is the increase in the capital gains inclusion rate from 50% to 66.7% for capital gains above $250,000.
This means:
- For profits over $250,000 from real estate, stocks, or other investments, 66.7% of the gain will now be taxable.
- This impacts high-net-worth individuals and businesses more heavily.
Despite Parliament’s prorogation, the CRA is moving forward with the new rate, with updated forms expected by January 31, 2025.
Tax Rate Reduction and Family Savings
The lowest federal income tax rate will drop from 15% to 14% effective July 1, 2025, bringing the average annual rate for 2025 to 14.5%.
Impact on Families:
- Two-income households may save up to $840 per year by 2026
- Around 22 million Canadians are expected to benefit
- Targeted savings for those earning under $114,750, especially below $57,375
The CRA will adjust payroll tax tables accordingly, so employees will begin noticing lower withholdings in their paycheques starting July 2025.
Charitable Donation Deadline Extended
To encourage giving, the CRA has extended the deadline for 2024 charitable donations to February 28, 2025. This allows:
- Contributions made in the first two months of 2025 to count for 2024 returns
- More time to maximize your tax credits
How and When These Changes Take Effect
| Change | Effective Date |
|---|---|
| New federal tax brackets | January 1, 2025 |
| Lower 14% income tax rate | July 1, 2025 |
| Payroll withholding adjustments | July 2025 |
| Capital gains inclusion hike | For gains over $250,000 in 2024 |
| Extended donation deadline | Until February 28, 2025 |
The 15–33% CRA tax changes for 2025 bring both relief and responsibility. Whether it’s the reduced tax rate, higher personal exemptions, or increased capital gains inclusion, these reforms are set to impact daily financial decisions, from your monthly income to your year-end tax filing.
By staying informed, planning ahead, and adjusting financial strategies, Canadians can maximize the benefits while avoiding unexpected tax liabilities.
FAQs
When will the new CRA tax rates take effect?
The new rates start on January 1, 2025, with reduced payroll withholdings visible from July 2025.
Who benefits from the reduced 14% tax rate?
Canadians earning under $114,750, especially those under $57,375, will benefit most from the 2025 tax cuts.
How does the new capital gains rule work?
Only gains over $250,000 will be taxed at the new 66.7% inclusion rate, starting from 2024 income.