Canada Day income tax changes. | Income tax filing | Discussion forum

Link useless, behind paywall.

It's about lowering the rate of the lowest federal income tax bracket (that applies to the first $57,375 (in 2025) of taxable income): "reducing the lowest marginal personal income tax rate from 15 per cent to 14 per cent, effective July 1, 2025."

See Department of Finance Canada: Delivering a middle-class tax cut.

It's 14%, down from 15% but effective 6 months into 2025. Therefore 2025 average is 14.5%.

UkrainianDude said
Less taxes collected, more budget deficit. Plus $28B over five years.
What is the logic behind this?
The PBO report also highlighted the potential net cost of the tax cut, estimating it could be up to $28 billion over the next five years after taking into account associated reductions in federal tax credits under the plan.
The federal deficit is projected to be $48.3 billion for 2024-25, with a baseline deficit of $42.2 billion (or 1.3 per cent of GDP) in the 2025-26 year that just began.  

At the risk of stating the obvious, cutting income taxes is a damned if you do, damned if you don't situation. Typically it puts more financial burden on future generations.

For a person with an income of $100,000. This is the result. Approximately $300 in 2025 and $600 in 2026. We need to thank 'future working canadians" for this.

The Basic Personal Amount is the income level that is not taxed federally.
In 2025, the BPA is $15,705.
In 2026, assume $16,225 (estimated increase due to indexation)

2025 Calculations (Effective rate 14.5% on first bracket due to July 1 change)
Split taxable income:
First $57,375 at 14.5%
Remaining $26,920 at 20.5%
Tax payable:
$57,375 × 14.5% = $8,318.38
$26,920 × 20.5% = $5,518.60
Total = $13,836.98

Without tax cut (old 15%):
$57,375 × 15% = $8,606.25
$26,920 × 20.5% = $5,518.60
Total = $14,124.85

Savings in 2025 = $14,124.85 − $13,836.98 = $287.87

2026 Calculations (Full-year rate: 14%)
Split taxable income:
First $57,375 at 14%
Remaining $26,400 at 20.5%
Tax payable:
$57,375 × 14% = $8,032.50
$26,400 × 20.5% = $5,412.00
Total = $13,444.50
Without tax cut (15%):
$57,375 × 15% = $8,606.25
$26,400 × 20.5% = $5,412.00
Total = $14,018.25

Savings in 2026 = $14,018.25 − $13,444.50 = $573.75

Massive deficit + no budget + unhinged spending + tax cuts = 3 months vacation

rinse and repeat

MattS said
...
sorry, I’m on a rant here one more point think of all the hundreds of millions of dollars that they kicked the crap out of us on carbon taxes you think with that kind of revenue windfall with a brand new taxation. It takes a real special kind of stupid to have deficits and debts rise when you’re raking in hundreds of millions of extra dollars on a new tax so that’s my point there’s no point leaving one sent with them. They won’t do anything productive with it anyway.  

I totally agree with your post. It's been highly political since 2015. We all know who got into power, and who's still holding it. The transformation of this country, for the worse, is nothing short of an economic disaster. At least, before that time, there was a coherent economic policy, debating points on policy. Now it's all about what they gonna come up with next. One thing for sure, the single most divisive economic policy in the "green transition", EV radical push, billions of $$$ handed in subsidies, an imposed economic policy, without public support, people who vote for, and without a well-thought roadmap with reasonable targets, all culminated in a huge debacle we all pay for. As of last read, Northern Volt in QC was axed, several carmakers pulled out, or postponed the plan by several years, citing low demand. If the masses don't subscribe to such transformable policy, it will crash.

MattS said
My general feeling from reading this thread is that people actually think tax cut is a bad thing? We are so overly tax in this country and they have prove and they will never do anything productive with the richness of tax revenue. They receive. Legalized stealing, which is what taxation is, you think it actually brings more benefit to you than leaving it in the actual earner’s pocket sorry I’m not on board with any of that I’ve always voted for the lowest cost government at every level. They burn it like firewood on most things I disagree with. Leave my money with me.. it needs to be a me first situation now…In 2015. We had one candidate say we need to keep a balance budget keep debt low and therefore keep taxes low and going lower, which is good for business , future job growth and standard of living for the average Canadian, the other person stated at the podium and promised to run up debt and deficits and the majority of Canadiens voted for that so I’m sorry it’s me first me and my family. I don’t give a rip about anyone else because that’s what we’ve created in this country.
My cousins moved to the United States five years ago it’s not even close in terms of taxation and standard of living. I pay a 50% marginal tax rate. My coworker had to pay out of his own pocket to go to Buffalo to get an MRI that was six months wait here. His therapist were telling him he can’t continue to walk with his damaged hip like that for another six months, but you can’t get an MRI here.
We gave $5 billion to educate people in the Philippines on climate change in December 2023
Why the hell would I wanna leave one more cent with a bunch of evil doers in Ottawa that spend on everything except things that are actually important to me and help your average life long Canadian. Our government views Canadians dead last, and everyone of their pet projects will get priority. Sorry I wouldn’t leave an extra half cent with them. Rack up more debts, give me more tax breaks, it’s what Canadian democracy voted for. Either way we go bust, we may as well have some good memories and some fun off those tax break dollars because it gives me no satisfaction if this country goes belly up that we educated Philippines on climate change or dropped more bombs on Russians, or spent more money on our military..
sorry, I’m on a rant here one more point think of all the hundreds of millions of dollars that they kicked the crap out of us on carbon taxes you think with that kind of revenue windfall with a brand new taxation. It takes a real special kind of stupid to have deficits and debts rise when you’re raking in hundreds of millions of extra dollars on a new tax so that’s my point there’s no point leaving one sent with them. They won’t do anything productive with it anyway.  

I am with you on this topic but unfortunately we are the minority at best.

It's the same as spending $$$$ to ship a rescue dog from middle east, so that it can be adopted in Canada. While tens of thousands of people are suffering from hunger and poor living conditions around the world where that money could be better spent.

The question is which taxes will be going up and which government expenditures will be cut. Both will happen, on a big scale.

I disagree that government expenditures will decrease, in my opinion we have an electorate that has been curated to toss out anybody that would do that.

And I think more than tax increases (that wouldn't be nearly enough) there will be all sorts of new taxes (and maybe clawback of senior CPP pension, etc) for those deemed to have too much wealth. There's still lots to grab from well-to-do.

Not advocating either, just what I think will happen in Canada.