With the beginning of 2025, changes are being made to Canadian federal policies that may affect the financial situation of citizens. Brian Quinlan, a certified public accountant at Allay LLP, points out that many of these changes are routine and include inflation-based adjustments to determine tax brackets or the contribution space in tax-free savings accounts (TFSA).

Key Financial Changes for 2025

Tax Brackets

The income limits for tax brackets have been increased by 2.7% to prevent inflation from pushing Canadians into higher tax brackets.

• 15%: on income up to $57,375.

• 20.5%: between $57,375.01 and $114,750.

• 26%: between $114,750.01 and $177,882.

• 29%: between $177,882.01 and $253,414.

• 33%: on income over $253,414.

Basic Personal Amount

The basic personal amount has increased to be between $14,538 and $16,129, depending on the individual's total income, compared to the 2024 figures which were between $14,256 and $15,705.

Canadian Pension Plan (CPP)

Canadian workers will see a slight increase in deductions from their paychecks due to rising CPP contributions.

• The first earnings ceiling rises to $71,300, compared to $68,500 in 2024.

• The second ceiling rises to $81,200, compared to $73,200 in 2024.

Capital Gains Tax

The proposed changes include increases in the percentage of taxable gains:

• For gains up to $250,000: the rate remains 50%.

• For gains exceeding $250,000: the rate rises to two-thirds of the gains.

These adjustments take effect on capital gains realized starting June 24, 2024.

Retirement Savings Accounts (RRSP)

• The annual contribution limit increases to $32,490 in 2025, compared to $31,560 in 2024.

• Contributors may use unused space from previous years.

Source: Canada Revenue Agency (CRA).