Canadians could see a little more money in their pockets starting next year. A new federal plan moving through Parliament would slightly lower income taxes for the country’s lowest earners.
The lowest tax rate would drop from 14.5% in 2025 to 14% in 2026, and the income brackets would shift upward to match inflation. This means most Canadians earning under $181,000 would pay a bit less in federal tax.
For example, someone making $65,000 would save about $325 in 2026 compared to 2025.
The Basic Personal Amount is also going up, rising from $16,129 to $16,452 in the new year.
However, CPP and EI contributions will also increase slightly in 2026, meaning workers will pay a bit more into retirement and employment insurance programs.
RRSP limits are rising too—you’ll be able to contribute up to $32,490 for the 2025 tax year, while TFSA contribution room stays the same at $7,000.
Overall, most Canadians will see small tax savings, balanced with slightly higher payroll deductions.
(Source: Global News)
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