As of July 1, 2025, the lowest federal individual income tax rate has been lowered from 15% to 14%.
For the 2025 tax year, the effective blended rate is 14.5% (since the change happened mid-year).
Beginning 2026, a full-year 14% rate applies to the first income bracket.
This change means lower-income Canadians will keep more of their earnings — potentially increasing take-home pay or reducing tax liability.
Under the 2025 budget, a non-refundable Top-Up Tax Credit has been introduced, effective from 2025 through 2030.
This ensures that while the base tax rate is lowered, taxpayers claiming large credits (for tuition, medical expenses, etc.) will not see their tax savings undermined by the rate change.
