As we approach the 2025 tax season, several updates and important deadlines will affect individuals, self-employed professionals, and corporations in Canada. Below, we’ve outlined the key changes to tax brackets, contribution limits, and government programs, as well as important filing deadlines to keep in mind.
2025 Canadian Tax Brackets
For 2025, federal tax brackets and personal tax credits have been adjusted for inflation, increasing by 2.7% (except for the $150,000 and $220,000 brackets, which remain unchanged). Similarly, Ontario’s brackets and credits will rise by 2.8%. While the rates themselves are unchanged, the updated brackets could impact your tax liability.
Canada Pension Plan (CPP) Limits for 2025
- Maximum Pensionable Earnings: Increased to $71,300, up from $68,500 in 2024.
- Maximum Self-Employed CPP Contribution: Rises to $8,068.20, up from $7,735.
- Maximum Employer Contribution: Increased to $4,034.10, up from $3,867.50.
These adjustments reflect annual changes aimed at ensuring pension sustainability.
Tax-Free Savings Account (TFSA) Contribution Limit
The annual TFSA contribution limit remains unchanged at $7,000 for 2025. For individuals who have been eligible since the program’s inception and never contributed, the total cumulative contribution room is now $102,000.
Home Buyers’ Plan Enhancement
Starting in 2025, the maximum withdrawal limit for the Home Buyers’ Plan will increase to $60,000, up from $35,000. The repayment period will span 15 years, beginning five years after the initial withdrawal for transactions between January 1, 2022, and December 31, 2025.
Proposed Capital Gains Changes
The capital gains inclusion rate could increase to 66.67% (2/3) for:
- Corporations and trusts.
- Individuals, for gains exceeding $250,000 annually.
These changes, along with a proposed increase to the Lifetime Capital Gains Exemption (LCGE) to $1,250,000, are still pending legislative approval. Taxpayers should monitor updates closely, as these changes may significantly impact their tax planning.
GST Holiday for the 2025 Holiday Season
The Canadian government has proposed a temporary suspension of GST/HST on essential goods to alleviate financial pressure during the holiday season. This exemption, pending approval, would run from December 14, 2024, to February 15, 2025 and include items such as:
- Prepared foods: Salads, sandwiches, and pre-made meals.
- Restaurant meals: Dine-in, takeout, and delivery.
- Children’s essentials: Clothing, footwear, and toys.
- Holiday decorations: Christmas trees and other items.
2025 Tax Deadlines
- Individuals:
- Tax returns for the 2024 tax year are due by April 30, 2025.
- Self-Employed Individuals:
- Filing deadline extended to June 16, 2025 (as June 15 falls on a Sunday).
- Note: Any taxes owed must still be paid by April 30, 2025, to avoid interest.
- Corporations:
- Tax returns are due six months after the fiscal year-end (e.g., June 30, 2025, for a fiscal year ending December 31, 2024).
- Taxes owed must be paid within two months after the fiscal year-end.
Get Professional Help
Navigating tax changes can be challenging. Whether you need assistance calculating taxes, planning for capital gains, or optimizing contributions, our team of professionals is here to help. Contact us today or subscribe to our newsletter for regular tax tips.
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