Published: December 7, 2025
Last Updated: January 8, 2026
With many tax changes already in effect or arriving soon for the 2025 tax year, now is the ideal time to review your current tax strategies and determine whether adjustments are needed to stay ahead.
The following tax tips highlight key changes you should consider as you update your tax planning. As always, our experienced tax lawyers are available to provide any guidance or assistance you need.
1. Reduction of the Lowest Federal Personal Income Tax Rate (Effective July 1, 2025)
The lowest federal marginal tax rate decreases from 15% to 14% mid-year, benefiting taxpayers in the lowest bracket.
Tip:
If you can choose when to receive certain types of income — such as bonuses, self-employment billings, or RRSP withdrawals — consider timing receipt for after July 1, 2025 to benefit from the reduced tax rate.
2. First-Time Homebuyer GST/HST Relief
There is a legislative proposal to eliminate GST on homes under $1 million and reduce it on homes priced between $1 million and $1.5 million.
Tip:
If you are a first-time homebuyer closing in 2025, consider awaiting final legislation. Your purchase may become substantially cheaper if the GST removal is approved.
3. Voluntary Disclosures Program (VDP) Changes (Effective October 1, 2025)
Beginning October 1, 2025, the CRA expands eligibility for the CRA Voluntary Disclosures Program (VDP), including for taxpayers prompted by CRA communications about identified compliance issues or where the CRA has received third-party information about potential non-compliance. This expanded eligibility does not apply where a tax audit or investigation (by the CRA or another authority) has already begun. Interest relief increases to 75% for unprompted applications and reduces to 25% for prompted applications. Penalties and criminal prosecution relief remain available, Form 199 (VDP Application Form) is simplified, and documentation rules are clarified.
Tip:
If you control the timing of correcting prior filings or undeclared income, consider applying on or after October 1 to benefit from improved interest relief and broader eligibility.
4. Increase in the Basic Personal Amount (BPA)
In 2025, the federal BPA rises to $16,129 for individuals with net income up to $177,882, decreasing to $14,538 for individuals with net income of $253,414 and above.
Tip:
Where permitted, consider shifting income between spouses so the lower-income spouse fully uses the BPA, reducing combined tax payable.
5. Automatic Tax Filing for Low-Income Individuals
The CRA is expanding programs that prepare and file returns automatically for eligible low-income Canadians, helping such individuals access benefits that would otherwise be lost due to non-filing. Eligible individuals must accept the invitation, provide consent, or use the simplified filing service.
Tip:
If you are a low-income Canadian and receive an invitation from the CRA, accept it promptly. Auto-filing may help you access important benefits. Provide consent where your circumstances permit.
6. Business Tax Filing Changes (T619 and Consolidation)
The T619 form and online validation systems have been updated to detect discrepancies before submission and to consolidate multiple information returns.
Tip:
Use the new consolidated process and validation tools to catch errors before filing, reducing penalties and tax audit risk.
7. TFSA Contribution Limit ($7,000 for 2025)
The TFSA limit for 2025 is $7,000. Lifetime room for someone eligible since 2009 with no contributions is now $102,000.
Tip:
Consider contributing early in the year to maximize tax-free investment growth.
8. CPP Income Sharing
Couples may share CPP income to reduce combined taxes.
Tip:
If one spouse is in a higher tax bracket, apply to share CPP income — this may reduce overall taxes and preserve income-tested benefits.
9. Increase in the Year’s Maximum Pensionable Earnings ($71,300)
CPP contributions apply until yearly income reaches $71,300 in 2025. Self-employed individuals contribute as both employer and employee.
Tip:
Self-employed individuals should budget for higher CPP contributions in 2025 and consider using RRSP contributions to offset the increased burden. This may also benefit non-self-employed individuals, though tax savings may be proportionally smaller.
10. Increase in the Year’s Additional Maximum Pensionable Earnings for CPP2 ($81,200)
CPP2 contributions apply at 4% for employees (and double for self-employed individuals) on income above the standard CPP maximum, up to $81,200.
Tip:
Review whether receiving income as salary (CPP-eligible) or dividends (not CPP-eligible) is more advantageous for your tax planning.
11. RRSP Rules for 2025 (Limit $32,490; Deadline March 2, 2026)
The 2025 RRSP deduction limit is the lower of $32,490 or 18% of earned 2024 income, up to $180,500. Unused contribution room carries forward.
Tip:
If you expect a higher-income year later, contribute now but save the deduction to 2026 to maximize future tax savings.
12. RRIF Conversion at Age 71
RRSPs must be converted to RRIFs by December 31 of the year you turn 71, with mandatory withdrawals beginning the following year.
Tip:
If you expect high taxable income later in retirement, consider withdrawing moderate amounts earlier to avoid large RRIF withdrawals that push you into higher tax brackets.
13. EI Maximum Insurable Earnings Increase ($65,700)
EI premiums rise as the maximum insurable earnings increase to $65,700 in 2025.
Tip:
Employers and employees — especially small businesses — should update payroll projections to reflect higher EI costs.
14. OAS Income Recovery Threshold Increase ($93,454)
OAS benefits are reduced once income exceeds $93,454 in 2025.
Tip:
If your income is near the clawback threshold, consider pension splitting, RRSP contributions, or deferring OAS (up to age 70). Ensure the deferral is worthwhile if you may qualify for the GIS.
15. Fuel Charge Rate Reduction to Zero (April 1, 2025)
Fuel charges were eliminated effective April 1, 2025, along with associated compliance obligations and rebates.
Tip:
Businesses should update tax processes after March 31 to stop tracking and remitting fuel charges and to adjust cash flow for the end of rebate payments.
16. Canada Worker’s Benefit (CWB) Enhancements
For 2025, the CWB increases to $1,633 for singles and $2,813 for families. Phase-in and phase-out thresholds expand, with rates of 27% and 15%, and a new second-earner exemption allows a lower-earning spouse to exclude up to $14,000 when calculating family net income.
Tip:
Couples with one lower-income worker should check whether the $14,000 exemption increases their CWB entitlement.
17. First Home Savings Account (FHSA)
The FHSA allows first-time homebuyers to make tax-deductible contributions toward a new home, with tax-free withdrawals for qualifying purchases. Limits are $8,000 annually and $40,000 lifetime.
Tip:
Open an FHSA as soon as possible — contribution room begins accumulating only after the account is opened.
18. RESP Contributions and Rules
RESP earnings grow tax-deferred, with lifetime contributions capped at $50,000 per beneficiary.
Tip:
Track contributions across all family RESPs to avoid overcontributing and triggering penalties.
19. RDSP Lifetime Contribution Limit ($200,000)
An RDSP may be opened for a Canadian resident under age 60 who is eligible for the Disability Tax Credit. Contributions are not deductible but grow tax-deferred, and withdrawals are generally tax-free. There is no annual limit, but the lifetime limit is $200,000 per beneficiary.
Tip:
Consider contributing earlier to maximize long-term compounding inside the plan.
20. Canada Greener Homes Loan (Up to $40,000 Interest-Free)
This program offers interest-free loans of up to $40,000 for energy-efficiency home retrofits. The loan is available only before retrofits begin, and the previous grant program has closed.
Tip:
Apply before starting any retrofit work. Beginning work before approval will disqualify you from the loan.
Here is the summary of all the registered accounts discussed above.
| TFSA | RRSP | RRIF | FHSA | RESP | RDSP | |
| Purpose | Saving | Retirement | Retirement | First home purchase | Education | Disability |
| Contribution | Not tax-deductible | Tax-deductible | No contribution | Tax-deductible | Not tax-deductible | Not tax-deductible |
| 2025 Contribution room | $7,000
|
Lower of $32,940 and 18% of 2024 earned income | Not applicable | $8,000 | No limit | No limit |
| Accumulated contribution limit | $102,000 (subject to conditions) | No limit | Not applicable | $40,000 | $50,000 per beneficiary for all RESPs combined | $200,000 per beneficiary |
| Contribution deadline | December 31, 2025 (year-end) | March 2, 2026 (60 days after year-end) | Not applicable | December 31, 2025 (year-end) | Contributable for 31 years | End of the year in which the beneficiary turns 59 |
| Earnings | Tax-free | Tax-deferred | Tax-deferred | Tax-free | Tax-deferred | Tax-free |
| Withdrawal | Tax-free | Taxable | Taxable | Tax-free | Taxable | Tax-free |
| Withdrawal limit | Up to available fund | Up to available fund | Minimum annual withdrawal
(excess withdrawal subject to withholding tax) |
Up to available fund | Up to available fund | Up to available fund |
| Withdrawal deadline | No deadline | At age 71 | Until fund runs out | Earliest of: 15 years, until age 71, or until first home purchase | After 35 years | Depend on issuer |
Upcoming tax deadlines
| Date | Deadline |
| December 31, 2025 | Contributions to TFSA and FHSA |
| March 2, 2026 | Contribution to RRSP |
| March 31, 2026 | Income tax return filing for trusts and estates |
| April 30, 2026 | Income tax return filing for individuals (without self-employment income) |
| June 15, 2026 | Income tax return filing for sole proprietorships (individuals with self-employment income)
(The filing deadline for corporations is 6 months after fiscal year-end) |
Tax brackets and rates for 2025
The federal tax brackets and rates for individuals in 2024 are:
| Tax bracket | Rate |
| Up to $57,375 | 14.5% |
| 57,375 – 114,750 | 20.5% |
| 114,750 – 177,882 | 26% |
| 177,882 – 253,414 | 29% |
| 253,414 and above | 33% |
The federal tax rates for general corporations in 2025 are:
| Manufacturing & processing income | Active business income | Investment income | |
| General corporate rate | 38% | 38% | 38% |
| Federal abatement | (10%) | (10%) | (10%) |
| Manufacturing & processing deduction | (13%) | Not applicable | Not applicable |
| General reduction | Not applicable | 13% | 13% |
| Gross federal rate | 15% | 15% | 15% |
The federal tax rates for Canadian-controlled private corporations (CCPCs) in 2025 are:
| Small business income (up to first $500,000) | Active business income | Investment income | |
| General corporate rate | 38% | 38% | 38% |
| Federal abatement | (10%) | (10%) | (10%) |
| Small business deduction | (19%) | Not applicable | Not applicable |
| General reduction | Not applicable | (13%) | Not applicable |
| Refundable tax | Not applicable | Not applicable | 10.7% |
| Gross federal rate | 9% | 15% | 38.7% |
We hope this issue of year-end tax tips has been helpful to you. Remember, this is only a summary of some of the most significant tax changes of the year. Please always consult with experienced Canadian tax lawyers when planning your taxes. On behalf of Rotfleisch & Samulovitch Professional Corporation, we wish you a joyous holiday and a happy new year!
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DISCLAIMER: This article just provides broad information. It is only up to date as of the posting date. It has not been updated and may be out of date. It does not give legal advice and should not be relied on. Every tax scenario is unique to its circumstances and will differ from the instances described in the article. If you have specific legal questions, you should seek the advice of a Canadian tax lawyer.
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