11/22/2024
📢 2025 Tax Update: Key Changes for the New Year Ahead.
💲UPDATED TAX BRACKETS - FEDERAL ONLY (EFFECTIVE JAN. 1, 2025):
• 15%: Income up to $57,375
• 20.5%: $57,375 - $114,750
• 26%: $114,750 - $177,882
• 29%: $177,882 - $253,414
• 33%: Over $253,414
Each province also has its own set of provincial tax brackets, most of which will also be indexed to inflation at the rate of 2.7% which was the amount determined for the coming year.
⬆️ BASIC PERSONAL AMOUNT (BPA):
• Increased to $16,129, meaning you can earn up to this amount tax-free.
• High-income earners (income above $177,882) see a phased reduction in the enhanced BPA, down to $14,538 at the top bracket.
☑️ CANADA PENSION PLAN (CPP):
• Contribution rate: 5.95% for employees/employers; 11.9% for self-employed.
• Maximum CPP earnings: $71,300, with a maximum contribution of $4,034.10 each (employee/employer) or $8,068.20 (self-employed).
• Additional contributions for income between $71,300 - $81,200 (CPP2): 4% employee/employer, max contribution $396 each.
For the self employed, this amount will be $792.00
☑️ EMPLOYMENT INSURANCE (EI):
• Premium rate: 1.64% (Quebec: 1.31%).
• Maximum insurable earnings: $65,700, with a max contribution of $1,077.48 (Quebec: $860.67).
💲 CRA SAVINGS LIMITS:
TFSA Limit: Stays at $7,000.
RRSP Limit: Increased to $32,490 (18% of your 2024 earned income, up to this limit).
🧓 OLD AGE SECURITY (OAS):
• Repayment threshold set at $93,454, which means for 2025, your OAS will be reduced if your taxable income is above this amount.
⬇️ PRESCRIBED INTEREST RATE:
• Dropping to 4% for Q1 2025.
• This is the rate (a base rate) that applies to taxable benefits for employees and shareholders, low-interest loans and other related-party transactions.
• If you owe the CRA money, however, the rate the CRA charges is a full four percentage points higher than the base rate above. This puts the interest rate on tax debts, penalties, insufficient instalments, unpaid income tax, CPP contributions and EI premiums at 8% come Jan. 1, 2025.
