Canada to lower personal income tax from July, benefiting 22 million people!

The Canadian federal government will officially implement the middle-class tax reduction commitment on July 1, providing personal income tax relief for millions of taxpayers across the country.

According to a Ministry of Finance announcement, the federal minimum marginal personal income tax rate will be reduced from 15% to 14%, and the tax cut will apply to the first $57,375 CAD of taxable income for the 2025 tax year, regardless of the taxpayer's annual income.

The federal Treasury stated that this tax cut is expected to benefit nearly 22 million Canadians, with most of the tax benefits going to those in the first two tax brackets, i.e., those with taxable income below $114,750 in 2025. Almost half will benefit the first tax bracket, i.e., those with taxable income of $57,375 or less.

The government expects this measure to save Canadians over 2.7 billion CAD in taxes over five years. By 2026, individuals could save up to $420, and couples could save up to $840 combined.

As the policy is implemented in mid-2025, the actual average tax rate for the entire year of 2025 will be 14.5%, while from 2026 onwards, the full-year tax rate will officially drop to 14%. The tax rate applicable to most non-refundable tax credits will also remain the same as the lowest tax bracket.

The Canada Revenue Agency (CRA) will update the withholding tax tables for July to December 2025. Employers and payroll administrators can start deducting taxes at the new 14% rate from July 1. This means:

· Starting July 1, individuals with employment income or other income subject to withholding will have their payroll tax withheld at 14%.

· If the tax rate is not updated immediately, taxpayers will receive a tax refund when they file their 2025 tax return in the spring of 2026.

However, some experts pointed out that although this tax cut is helpful, it is still insufficient to address the current cost-of-living crisis and called on the government to further increase benefits, tax credits, and affordable housing support.

Original article: https://www.toutiao.com/article/1836389775261708/

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