The start of a new year often signals the implementation of new federal and provincial regulations. In 2025, several significant changes are coming into effect, ranging from updates to tax rules and savings account limits to adjustments in minimum wage and new housing policies. Here’s an in-depth look at these changes and their potential impact.
New Tax Regulations for 2025
Tax Brackets Indexed for Inflation
Each year, the Canada Revenue Agency (CRA) adjusts income tax brackets to reflect inflation. For 2025, the indexing rate is set at 2.7%, lower than the 4.7% adjustment in 2024. This change aims to provide relief for Canadians whose income growth lags behind inflation.
The updated federal tax brackets are as follows:
| Income Range | Tax Rate (%) |
|---|---|
| Up to $57,375 | 15 |
| $57,375 to $114,750 | 20.5 |
| $114,750 to $177,882 | 26 |
| $177,882 to $253,414 | 29 |
| Above $253,414 | 33 |
Savings Accounts and Retirement Contributions
Tax-Free Savings Account (TFSA) Limit
The annual TFSA contribution limit remains unchanged at $7,000 for 2025. Canadians born in 1991 or earlier who have never contributed can now accumulate up to $102,000 in their accounts. This program, introduced in 2009 with a $5,000 cap, adjusts limits annually for inflation.
Registered Retirement Savings Plan (RRSP) Contributions
The RRSP contribution limit for 2025 is 18% of the previous year’s income, with a maximum contribution cap of $32,490, up from $31,560 in 2024.
Canada Pension Plan (CPP) Contributions
CPP contributions are increasing as part of a six-year plan:
- Employee rate: 5.95%, with a maximum contribution of $4,034.10.
- Self-employed rate: 11.9%, with a maximum contribution of $8,068.20.
For earnings between the first and second ceilings ($71,300 to $81,200), an additional CPP contribution applies:
| Category | Contribution Rate (%) | Maximum Contribution ($) |
|---|---|---|
| Employee/Employer | 14 | 396 |
| Self-Employed | 8 | 792 |
Employment Insurance Premium Adjustments
For 2025, the Employment Insurance (EI) premium rate for employees is reduced to $1.64 per $100 of insurable earnings, with a maximum contribution of $1,077.48. Employer premiums are set at $2.30 per $100, with a maximum of $1,508.47. In Quebec, lower EI rates apply.
Minimum Wage Updates
Several provinces will see minimum wage increases in 2025:
| Province | Current Wage ($) | New Wage ($) | Effective Date |
|---|---|---|---|
| Ontario | 17.20 | Adjusted Annually | October 1 |
| British Columbia | 17.40 | Adjusted Annually | June 1 |
| Yukon | 17.59 | Adjusted Annually | April 1 |
| Nova Scotia | 15.20 | Adjusted Annually | April 1 |
| New Brunswick | 15.30 | Adjusted Annually | April 1 |
Additional Federal Programs
Canadian Dental Care Plan
In 2025, this program expands to cover all eligible Canadians with a net family income under $90,000. Coverage ranges from 40% to 100% of dental care costs, depending on income.
Canada Child Benefit Extension
Starting January 2025, the Canada Child Benefit will continue for up to six months after a child’s death, providing additional support to grieving families.
Housing and Mortgage Policy Changes
New Mortgage Rules
To make homeownership more accessible, the following changes took effect on Dec. 15, 2024:
- Minimum down payment: 5% on the first $500,000 and 10% for amounts between $500,000 and $1.5 million.
- Insured mortgages allowed on homes priced up to $1.5 million.
- First-time homebuyers can secure 30-year amortizations.
Secondary Suite Loan Program
Homeowners can apply for low-cost loans up to $80,000 to create rental units like basement apartments. The program offers 15-year terms at a 2% interest rate, launching in January 2025.
Provincial Policy Highlights
British Columbia
- Anti-Home-Flipping Tax: A 20% tax on profits from properties sold within two years of purchase.
- Rent Cap: Maximum rent increase set at 3% for 2025.
Ontario
- Child-Care Fee Caps: Daily fees reduced to $22 for centers in the $10-a-day program.
- Immigration Act Updates: Tougher penalties and regulations for immigration representatives.
FAQs
What is the new TFSA limit for 2025?
The TFSA contribution limit remains at $7,000, with a cumulative total of $102,000 for those eligible since 1991.
How does the new CPP contribution system work?
For 2025, contributions apply at a standard rate of 5.95%, with additional contributions for earnings between $71,300 and $81,200 under the CPP2 plan.
What are the key mortgage changes for 2025?
The new rules reduce the minimum down payment for homes up to $1.5 million and allow first-time buyers a 30-year amortization.
