Tax Lines to Look Out For on Your 2025 Canadian Tax Return

The deadline for filing your 2025 income tax return is April 30, 2026. With several changes this year, from a lower federal tax rate to new benefits and eliminated credits, it pays to know what has changed before you file. This guide covers the key updates, deductions, and credits separated into sections for Individuals and Families, and Self-Employed Individuals.

For Individuals and Families

Federal Tax Rate Reduction

Effective July 1, 2025, under draft legislation introduced May 27, 2025, the lowest federal income tax rate was reduced from 15% to 14%. Because this change took effect halfway through the year, the blended rate for 2025 is 14.5%. This applies to the first $57,375 of taxable income and could save an individual up to $420 per year, or up to $840 for a two-income household.

Because the lowest rate also determines the value of most non-refundable tax credits, the government introduced a new top-up credit. This credit restores the full 15% value on eligible non-refundable credits claimed on amounts above $57,375, so the rate cut does not reduce the value of credits like the Basic Personal Amount, medical expenses, or tuition. This top-up credit will remain in place through the 2030 tax year.

Basic Personal Amount (BPA)

For 2025, the Basic Personal Amount has increased to $16,129 for taxpayers with net income up to $177,882. For those with net incomes above this amount, the BPA is gradually reduced, reaching a minimum of $14,538 at incomes of $253,414 or higher.
 

Capital Gains

The proposed increase in the capital gains inclusion rate from 50% to 66.67% on gains over $250,000 for individuals (and on all gains for corporations and most trusts) has been cancelled. The inclusion rate remains at 50% for all taxpayers. However, the lifetime capital gains exemption has been raised to $1,250,000 for qualifying dispositions of small business shares and farming or fishing property, up from $1,016,836.

Canada Disability Benefit

A new benefit became available in June 2025, providing up to $200 per month ($2,400 per year) for Canadian residents aged 18 to 64 who are approved for the Disability Tax Credit.

The benefit is income-tested, with the maximum amount generally available to single individuals with adjusted family net income of $23,000 or less. For couples, the threshold is higher (generally $32,500 after a working income exemption).

The benefit is gradually reduced as income increases. For single individuals, it is typically reduced by 20 cents for each dollar above the threshold. For couples, the reduction may be 20% or split at 10% each, depending on whether one or both partners qualify for the benefit.

What Has Been Eliminated

Canadian Journalism Tax Credit: The 15% non-refundable tax credit for qualifying digital news subscriptions (up to $75 per year) is no longer available for 2025.

Home Accessibility and Medical Expense Double-Claim: Under proposed measures announced in Budget 2025 and included in Bill C-15, 2025 is expected to be the final year that certain expenses qualifying for the Home Accessibility Tax Credit can also be claimed as a medical expense. Starting in 2026, these expenses will generally need to be claimed under only one provision and cannot be double-counted. Individuals planning eligible renovations may wish to take advantage of the current rules before this change takes effect.

Alternative Minimum Tax (AMT)

The updated AMT rules that took effect in 2024 continue to apply. These include a higher minimum tax rate, modified calculation for adjusted taxable income affecting foreign tax credits and minimum tax carryovers, and limited value on most non-refundable tax credits.

Popular Tax Credits and Deductions

Canada Training Credit (CTC) Eligible taxpayers aged 26 to 65 can claim this refundable tax credit to cover a portion of eligible tuition and fees for training or courses to enhance their skills.

Canada Caregiver Credit (CCC) This non-refundable tax credit supports individuals caring for family members or dependents with a physical or mental impairment. The amount varies based on the dependent's relationship, net income, and circumstances.

Child Care Expenses Child care expenses, such as daycare, nursery schools, day camps, and boarding schools, are deductible if incurred to enable a parent or guardian to work, pursue education, or conduct research.

Disability Tax Credit (DTC) The DTC provides a non-refundable tax credit for individuals with disabilities or their caregivers to reduce the amount of income tax payable. For 2025, the disability amount is $10,138. Applicants must have a certified disability lasting at least 12 months. The expenses eligible for the disability supports deduction have also been expanded for 2025.

Moving Expenses Deductible moving expenses include transportation and storage costs, travel expenses, temporary living costs, and incidental expenses incurred when relocating at least 40 kilometers closer to a new work location, educational institution, or business location.

Interest Paid on Student Loans Interest paid on eligible student loans can be claimed as a non-refundable tax credit. The loans must be under federal, provincial, or territorial student loan programs.

Donations and Gifts Donations made to registered charities or other qualified organizations qualify for non-refundable federal and provincial tax credits. Typically, eligible amounts up to 75% of net income can be claimed. Note: due to the Canada Post strike in late 2024, eligible donations made in the first two months of 2025 can also be claimed on a 2024 return.

GST/HST Credit The GST/HST credit is a quarterly refundable payment designed to offset the impact of sales tax on low to moderate-income individuals and families. Eligibility is automatically assessed based on the annual tax return.

RRSP Contributions The maximum RRSP contribution for 2025 has increased to $32,490 (up from $31,560 in 2024), based on 18% of the previous year's earned income. The TFSA annual contribution limit remains at $7,000 for 2025.

First Home Savings Account (FHSA) Contributions of up to $8,000 per year (lifetime limit of $40,000) are tax-deductible, grow tax-free, and qualifying withdrawals for a first home purchase are also tax-free. The FHSA can be used alongside the Home Buyers' Plan, which maintains a withdrawal limit of $60,000.

For Self-Employed Individuals

CPP Contributions

Self-employed individuals pay both the employee and employer portions of CPP, for a combined rate of 11.90% on earnings up to the YMPE ($71,300). For CPP2, the self-employed rate is 8% on earnings between $71,300 and $81,200, with a maximum CPP2 contribution of $792.