Canada’s income tax brackets have changed and here’s what you’ll pay in 2025

Canadians’ federal income tax bracket has changed slightly this year, according to the Canada Revenue Agency (CRA).

The CRA revealed the federal tax brackets for 2025, adjusted for inflation. While federal tax rates are the same, the income thresholds for each bracket have shifted.

In 2025, the indexation increase will be 2.7 per cent, which is lower than the 4.7 per cent bump in 2024, according to the agency.

This is how much income tax you’ll have to pay next year based on your bracket:

• Less than or up to $57,375 — 15 per cent
• Between $57,375 and $114,750 — 20.5 per cent
• Between $114,750 and $177,882 — 26 per cent
• Between $177,882 and $253,414 — 29 per cent
• $253,414 and over — 33 per cent

This comes after the federal government proposed changes to the capital gains tax last June that would increase the inclusion rate from one-half to two-thirds for any Canadian or corporation that makes over $250,000 per year in capital gains. It would only impact a small portion (0.13 per cent) of the wealthy population.

The capital gains tax hike was introduced as a ways and means motion in the House of Commons last June, but the bill didn’t pass due to pushback from the Conservatives. Its fate now hangs in the balance after Prime Minister Justin Trudeau decided to resign and prorogue Parliament.

The House defines the prorogation of Parliament as “the termination of a session.” During this period, bills that haven’t passed into law “die,” but the government can choose to revive them once Parliament is back in session.

However, that doesn’t guarantee a smooth passing of the capital gains tax bill. Efforts could be squandered if the Liberal government doesn’t survive a non-confidence vote, which is expected to happen soon after prorogation ends.

There is a catch to all of this. In an email statement on Tuesday, an official from Canada’s department of finance said that while these proposed changes are subject to parliamentary approval, the Canada Revenue Agency (CRA) can still administer the hike, which came into effect on June 25, 2024, because it was tabled as a ways and means motion.

When it was first announced, Canadians ripped on the wealthy upset by the capital gains tax hike, and certain industries like the medical field said the hike could push doctors to quit.

If you’re worried about your income tax taking a big chunk from your bank account this year, there are several government benefits increasing this year, including the Canada Child Benefit