2025 Federal Budget commentary

Here are highlights from today’s Budget that may affect Clients.

Source of highlights: Government of Canada, Department of Finance, Publications and Reports, Fiscal Updates, Budget 2025.
Please note: The material on this web page doesn’t state any political perspectives and isn’t an analysis of the budget. Seek legal, accounting, taxation, or other advice from a qualified professional.

Tax cuts and benefits

• A middle-class tax cut: The budget confirms it would lower the first marginal personal income tax rate from 15% to 14.5% for taxable income up to $57,375 in 2025. This could save individuals up to $420 per year, or $840 for two-income families.
• Top-Up Tax Credit: A new, temporary tax credit to help maintain tax fairness, particularly for those whose non-refundable tax credits exceed the first tax bracket. The intent of this measure is to ensure that certain taxpayers aren’t negatively affected by the proposed reduction in the lowest federal personal income tax (PIT) rate.
• Eliminate GST for first-time home buyers: The budget confirms: no more Goods and Services Tax (GST) for first-time home buyers on new homes up to $1 million, with reduced GST on homes between $1 million and $1.5 million.
• Cancellation of consumer carbon price: The budget confirms the elimination of the fuel charge, reducing gas prices and the cost of living.
• Automatic federal benefits: Starting with the 2026 tax year, the government plans to automatically file taxes for up to 5.5 million low-income Canadians by 2028, ensuring they receive benefits they're entitled to.
• The budget would eliminate the Underused Housing Tax of 1% on vacant or underused housing.
• It would also remove the Luxury Tax on aircraft priced over $100,000 and boats priced over $250,000.

Food security

• National School Food Program: This budget would make the program permanent, aiming to provide meals to 400,000 more children yearly, which could save participating families with two children an average of $800 per year on groceries.

Education and youth employment

• Canada Summer Jobs would fund around 100,000 summer jobs in 2026.
• Youth Employment and Skills Strategy would provide employment, training, and support to about 20,000 youth facing employment barriers.
• Through wage subsidies, the Student Work Placement Program would support around 55,000 post-secondary students in gaining employment with work-integrated learning opportunities in 2026-27.

Support for workers and specific groups

• Employment Insurance (EI): Temporary measures to provide income stability include:
  • Waiving the one-week waiting period until April 11, 2026.
  • Providing 20 extra weeks of income support (up to a maximum of 65 weeks) for eligible long-tenured workers. 
• Personal Support Workers Tax Credit: A temporary, refundable tax credit equal to 5% of eligible earnings, providing up to $1,100 per year for personal support workers in certain provinces and territories.
• A reskilling package for workers: Support including training, employment services, and job-search aids.
• Union Training and Innovation Program: The Red Seal skilled trades and apprenticeship program will expand apprenticeship training.
• Canada Disability Benefit: A one-time supplemental payment of $150 for each Disability Tax Credit certification or re-certification.

Tax incentives for businesses

• Productivity super-deduction: The budget would allow businesses to write off a larger share of their investment costs immediately, with the goal of stimulating productivity and competitiveness.
  • The super-deduction consists of a set of enhanced tax incentives to encourage capital investment. This includes a new measure to allow immediate expensing (a 100% first-year write-off) for manufacturing or processing buildings and the reinstatement of the existing Accelerated Investment Incentive.

Banking and financial services

• Cheque-hold periods: The budget would reduce the number of days banks may hold deposited cheque funds and increase the value threshold for shorter-hold periods.
• Immediate funds availability: It would also raise the first amount of immediately available deposited cheque funds from $100 to $150.

Resources

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