Canadian Tax Change Highlights for 2025
Income tax rate reduction, top-up tax credit, regaining access to My Account, disability supports deduction expenses, northern residents deduction for Haida Gwaii, bare trust reporting again delayed to 2026, provincial tax changes.
Individual Income Tax Rate Reduction
The lowest individual income tax rate will be reduced from 15% to 14% as of July 1, 2025. This change takes effect halfway through the year, which means taxable income under $57,375 in 2025 will be taxed federally at a rate of 14.5%.
Top-up Tax Credit
The reduced federal tax rate has the unfortunate consequence of reducing somewhat most federal non-refundable tax credits. In some cases where an individual's non-refundable tax credits are very high, the decrease in value of the non-refundable tax credits may exceed the tax savings from the rate reduction. The top-up tax credit will maintain a 15% rate for certain non-refundable tax credits claimed on amounts over the first income tax bracket threshold of $57,375. Tax savings from this credit will be fairly minimal and applicable in rare situations only.
Regaining Access to My Account
If you are locked out of your CRA account or forget your sign-in information, you can now regain access online – there is no need to call Canada Revenue Agency. You can use the their new "self-service" option to create a sign-in and get back into your account:
- Go to Sign in to your CRA account
- Under Help, select "Your account is locked"
- Follow the instructions
Disability Supports Deduction Expenses
If you have an impairment in physical or mental functions and are eligible to claim the disability supports deduction, the list of eligible expenses you can claim has expanded.
Northern Residents Deduction for Haida Gwaii
The islands of Haida Gwaii have been reclassified from prescribed intermediate zone to prescribed northern zone, allowing qualifying residents to claim up to the maximum value of the northern residents deduction.
Bare Trust Reporting for 2025
Bare trust reporting requirements the government first tried to implement in 2023 have been delayed again. A Dec. 16, 2025 update states that CRA does not expect bare trusts to file a T3 Trust Income Tax and Information Return (T3 return) including Beneficial Ownership Information of a Trust (Schedule 15) for taxation years ending in 2025. Certain bare trusts will be required to file for taxation years ending on or after December 31, 2026.
It is also proposed that for taxation years ending on or after December 31, 2025, certain trusts may not be required to file a T3 return if specific conditions are met. Where those conditions are not met and a T3 return is required to be filed, these trusts will not be required to file Schedule 15 with their T3 return for taxation years ending on or after December 31, 2025.
Provincial Tax Changes
Alberta has a new initiative to promote organ and tissue donation. If you want to receive information by email about Alberta's organ and tissue donation program, tick "yes" at the bottom of page 2 of your return.
The British Columbia climate action tax credit program has ended.
The Manitoba school tax credit for homeowners and the education property tax credit have been replaced by the homeowners affordability tax credit. The renters tax credit has been renamed the renters affordability tax credit.
Newfoundland and Labrador have introduced a disability benefit, and the seniors' benefit with its income eligibility thresholds will now increase annually to reflect the cost of living.
The Northwest Territories cost of living offset has ended.
The Nunavut carbon credit has ended, and the volunteer firefighter tax credit has been replaced by the tax credit for volunteer firefighters and search and rescue volunteers.
In Ontario a new refundable fertility treatment tax credit of 25% of eligible expenses up to $20,000, for a maximum credit of $5,000, has been introduced.
Saskatchewan brought in a new non-refundable home renovation tax credit of 10.5% of eligible home renovation expenses, to a maximum of $4,000 in expenses. An additional amount is available for individuals 65 years of age or older. A new refundable fertility treatment tax credit of 50% of eligible expenses, for a maximum credit of $10,000, has also been introduced.
Yukon has introduced a new refundable fertility and surrogacy tax credit of 40% of eligible expenses for a maximum credit of up to $10,000. The Yukon carbon price rebate for individuals has ended.
New Brunswick, Nova Scotia, Prince Edward Island: minimal changes; nothing too interesting.