Expect to see tax changes when filing return

Canadians heading into the 2025 tax filing season will see a range of federal tax changes and updated benefits as the Canada Revenue Agency opens its online services on Feb. 23.

One of the most significant federal changes is the reduction in the lowest personal income tax rate. The tax rate on income up to $57,375 has been reduced from 15 per cent to 14.5 per cent for 2025 and is scheduled to drop further to 14 per cent for 2026.

The change could represent tax savings of up to $286 for the year, though many Canadians may not notice a major difference at filing time because the reduction was already reflected in payroll deductions starting last summer.

While many of the changes are modest, understanding them ahead of time can help filers avoid surprises and ensure they receive the benefits they qualify for, UFile national tax specialist Gerry Vittoratos told the Sun.

“It should not have a big effect on the tax refund itself because the reduction has already been applied to payroll taxes since July 2025,” Vittoratos said in an email. “Many workers would have seen slightly higher take-home pay in the second half of last year.”

The lower tax rate also affects the value of non-refundable tax credits, which are calculated using the same percentage, he said. At the same time, indexed increases to the basic personal amount and tax brackets mean more income is exempt from taxation.

Vittoratos said the basic personal amount increased by $424 between 2024 and 2025, resulting in roughly $61 in tax savings for eligible taxpayers.

“Canadians whose income sits near tax bracket thresholds may see additional savings because more of their income remains taxed at the lowest rate,” he said.

He said another new measure is the Canada Groceries and Essentials Benefit, which enhances the existing GST credit.

“Eligible individuals will receive a one-time top-up payment equivalent to a 50 per cent increase, expected to be paid by June 2026, followed by a 25 per cent increase in benefit amounts for five years starting in July 2026,” he said. “Eligibility will be tied to GST credit qualification, meaning filing a tax return remains essential to receive the benefit.”

Vittoratos said businesses will also see changes through the Accelerated Investment Incentive, allowing companies that acquire and put depreciable property into use between 2025 and 2029 to claim up to triple the allowable first-year depreciation expense.

“The measure is designed to encourage investment by improving short-term cash flow, though it applies only in the first year an asset is put into use,” he said.

For lower-income Canadians, he said, the federal government is introducing automatic tax filing in certain situations to help ensure eligible individuals receive benefits that typically require filing a return. Under the program, the CRA may prepare a tax return on behalf of eligible individuals whose income information is already available through official slips and who meet specific income and filing criteria. Individuals will have 90 days to review or modify the information before a return is finalized, and they will be able to opt out of the process.

Vittoratos said many taxpayers overlook how closely benefits are tied to filing a return, even when little or no tax is owed. Programs such as the Canada Child Benefit, Canada Workers Benefit and Guaranteed Income Supplement are calculated using information from annual tax filings, while others, including the Canada Disability Benefit and Canadian Dental Care Plan, require separate applications but still rely on tax information to determine eligibility, he said.

While there are a few brand-new deductions for 2025, Canadians often miss changes introduced in federal budgets or economic statements that take effect immediately or retroactively.

“Everybody would be well served to at least look at the highlights of the budgets and economic statements in order to benefit from changes made right away,” Vittoratos said.

With online filing approaching, Vittoratos said Canadians need to prepare for enhanced security measures, including mandatory backup multi-factor authentication for CRA online accounts.

“Filers should ensure passwords are secure, particularly when using banking credentials through partner sign-in options, encrypt tax documents where possible and use secure portals rather than email when exchanging sensitive information,” he said.

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