Key Tax Changes in Canada Ahead of Filing Season
As Canada’s tax filing season approaches, the Canada Revenue Agency (CRA) is set to open its NETFILE system on Monday, February 23, allowing taxpayers to submit their returns. Experts recommend preparing early to avoid missing out on available tax credits and deductions.
Yannick Lemaire, a tax expert at H&R Block, notes that more than 400 tax credits and deductions are available. Meanwhile, Gerry Vittoratos, National Tax Specialist at UFile Canada, stresses the importance of keeping up with recent federal budget changes—especially since the budget announcement was moved to November, leaving less time to benefit from certain measures immediately after they come into force.
Among the most notable tax updates this season is a middle-class tax cut. The lowest personal income tax rate will be reduced from 15% to 14.5% for 2025, then to 14% starting in January 2026, alongside the introduction of new tax brackets. The reduction applies to the first CAD 57,375 of taxable income.
The Canadian government estimates that the maximum savings will reach up to CAD 420 per individual and CAD 840 per couple in 2026, totaling CAD 27 billion over five years.
The government also announced a one-time Canada Groceries and Essentials Benefit to help offset rising food costs for low-income households. This includes a 50% increase in the annual GST credit for 2025–2026, with plans to boost the program by 25% for five years starting in July 2026. The total support is expected to reach CAD 11.7 billion over six years. To receive the payment, taxpayers must file their 2025 tax return on time.
As part of efforts to simplify the process, the government stated that the CRA will be able to automatically file tax returns for low-income Canadians to ensure they receive benefits such as the Canada Child Benefit and the GST/HST Credit. There are also plans to expand this service to cover 5.5 million people by 2028, although some cases may still require direct communication with the agency to ensure data accuracy.
The government has also abolished the Underused Housing Tax for all years after 2025 and repealed the luxury tax on cars, aircraft, and yachts for most high-end vehicles, while it will still apply to certain vehicles valued at more than CAD 100,000.
In addition, the consumer carbon tax was eliminated on April 1, 2025, with eligibility for the final rebate remaining available to those who did not file their 2024 tax return before October 30, 2026.
Canadian experts are urging taxpayers to prepare early for the tax season and carefully review all available credits and deductions, particularly in light of recent changes affecting income, government benefits, and tax obligations, to ensure they fully benefit from the new adjustments when filing their tax returns.
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