Each year, the Canada Revenue Agency (CRA) updates tax rates, credits, and benefits to reflect inflation and policy adjustments. For 2025, several key changes could impact both individuals and families. Here’s a breakdown of what you need to know before filing your next return.
1. Updated Federal Tax Brackets
For 2025, the CRA has indexed federal tax brackets to inflation. This means slightly higher income thresholds before moving into the next tax bracket. This adjustment helps offset the impact of inflation, reducing the likelihood of Canadians paying higher taxes simply due to cost-of-living increases.
2. Increased Basic Personal Amount (BPA)
The Basic Personal Amount — the portion of income every Canadian can earn tax-free — continues to rise in 2025. This change helps lower-income and middle-class Canadians keep more of their earnings.
3. Expanded Canada Workers Benefit (CWB)
The CWB continues to provide additional support to low-income workers. The eligibility thresholds have been slightly expanded, allowing more Canadians to qualify for the refundable benefit.
4. RRSP and TFSA Limit Updates
The annual contribution limit for RRSPs and TFSAs typically increases each year. For 2025, Canadians can contribute up to 18% of earned income to an RRSP (to a maximum limit announced by CRA), and the TFSA contribution limit has also seen a modest increase.
5. Enhanced Disability Tax Credit (DTC)
The government has simplified the eligibility process for the Disability Tax Credit and broadened the criteria for mental and physical impairments, making it easier for Canadians to access this support.
6. Climate Action Incentive Payment (CAIP)
Residents of certain provinces continue to receive quarterly CAIP payments. In 2025, the payment amounts have been adjusted to reflect updated carbon pricing and household size.
The Bottom Line
Understanding annual CRA updates can help you plan ahead, optimize your deductions, and ensure you receive every benefit available. Stay informed — even small changes can have a meaningful impact on your tax refund or balance owing.
Written by TheAccru Tax Team — simplifying Canadian taxes for individuals and families.
