03/31/2026
๐๐ข๐๐๐ฅ๐โ๐๐ฅ๐๐ฌ๐ฌ ๐๐๐ฑ ๐๐ฎ๐ญ๐ฌ, ๐๐๐ฉ๐๐๐ฅ๐๐ ๐๐๐ฑ๐๐ฌ & ๐๐๐ฐ ๐๐ซ๐๐๐ข๐ญ๐ฌ
The 2025 budget delivers both relief and fairness measures. Here are three changes to know:
1. Middleโclass tax cut & topโup credit โ The first marginal personal incomeโtax rate falls to 14.5% for 2025 and 14% starting 2026. To prevent the rate reduction from eroding the value of nonโrefundable credits, a topโup tax credit maintains a 15% credit rate on amounts above the first bracket.
2. Repeal of Underused Housing Tax (UHT) and luxury tax โ The UHT, which applied to vacant or underused residential property owned by certain nonโresidents, will be eliminated starting in the 2025 calendar year. The luxury tax on boats and airplanes ends after November 4 2025, though higherโend vehicles remain subject.
3. Personal support workers (PSW) tax credit โ Recognizing the essential work of PSWs, the budget introduces a temporary refundable tax credit worth 5 % of eligible earnings, up to $1,100 per year, for 2026โ2030. The credit does not apply to amounts earned in British Columbia, Newfoundland & Labrador or the Northwest Territories.
Other notable measures include closing a โdoubleโdippingโ loophole that previously allowed simultaneous claims under the Home Accessibility Tax Credit and Medical Expense Tax Credit, effective January 1 2026, and cancelling the proposed Canadian Entrepreneursโ Incentive while retaining the enhanced $1.25 million Lifetime Capital Gains Exemption.
๐๐๐ญ๐ข๐จ๐ง: Homeowners should claim both the HATC and METC on qualifying renovations before the end of 2025. PSWs should track eligible earnings to maximize the new credit once it starts in 2026. For investors, the repeal of UHT and luxury taxes may alter the attractiveness of certain assetsโdiscuss these changes with your advisor.
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Disclaimer:
This post is general information only and not tax advice. Feel free to save or share this, and contact us if you need assistance getting organized.
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