Canada Announces 2025 Income Tax Indexation Adjustments

OTTAWA, Canada, November 15, 2024 – Canada The Canada Revenue Agency (CRA) ​published adjustments to the 2025 index for personal tax ​and benefit amounts, reflecting changes in ​the Consumer Price Index (CPI). This annual review has an impact on ​tax group thresholds, non-refundable credits, and ​income-proven benefits to align taxes with inflation.

The indexation rate for 2025 is set at 2.7%, a decrease of 4.7% applied in 2025. Among the significant changes, the basic personal amount for individuals with net income below the 29% tax threshold increases to $16,129 in 2025, to $15,705 in 2025. For those with higher ​incomes in the highest tax scale, this amount increases to $14,538 out of $14,156.

Tax brackets also ​include adjustments. The 20.5 per cent tax rate will now apply to income above $57,375 in 2024. Similarly, the rate of 26% ​begins at ​$114,750, and the highest rate of 33% ​now begins at $253,414. These adjustments provide modest relief to taxpayers by reducing the impact of inflation on tax obligations.

Indexed benefits such as ​the ​Canada Child Benefit and the GST/HST credit will be adjusted by mid-year, July ​1, 2025, according to the year cycle of the program. For example, the maximum GST/HST provision for a person ​increases from $340 in 2025 to $349 ​in 2025, with parallel increases in child benefits ​and ​family income thresholds.

The fundamental changes also apply to other benefits and credits. The level of employment in Canada rose to $1,471 in 2025, while the level of disability was ​$10,138. ​The limits on adoption costs and medical tax credits have also been ​updated to reflect indexation.

The CRA’s indexing initiative underscores its commitment to maintaining ​fairness in ​the ​tax system in the ​midst ​of inflationary pressures. These changes are intended to help Canadian ​taxpayers, particularly those in low- and ​middle-income brackets, ​maintain purchasing ​power.