11/05/2025
Federal Budget 2025: Key Points
https://www.budget.canada.ca/2025/report-rapport/intro-en.html
Personal Tax Return Credits
The middle-class tax cut previously announced in May 2025 reduced the first marginal personal income tax rate from 15 per cent to 14.5 per cent for 2025 (and 14 per cent for 2026 and subsequent taxation years). Budget 2025 proposes to introduce a new non-refundable Top-Up Tax Credit aimed at maintaining the current 15 per cent rate for non-refundable tax credits claimed on amounts more than the first income tax bracket threshold. This Top-Up Tax Credit would apply for the 2025-2030 years.
Home Accessibility Tax Credit (HATC)
The HATC is a non-refundable tax credit available for eligible home renovation or alteration expenses (incurred to improve the safety, accessibility, or functionality of an eligible home). The medical expense tax credit is a non-refundable tax credit available for eligible medical expenses. Currently, if the eligibility criteria for both credits are met, taxpayers may claim both credits in respect of the same expenses. Budget 2025 proposes to eliminate the ability to claim both credits in respect of the same expense.
Underused Housing Tax (UHT)
The UHT is an annual 1 per cent tax that is targeted towards certain non-Canadian owners of vacant or underused residential property in Canada. Budget 2025 proposes to eliminate the UHT as of the 2025 calendar year. As a result, no UHT would be payable and no UHT returns would be required to be filed for 2025 and subsequent years.
Luxury Tax on Aircraft and Vehicles
A luxury tax is currently imposed by the Federal Government on sales, importations, leases, and certain improvements of vehicles and aircrafts with a value above $100,000, and boats with a value above $250,000. Budget 2025 proposes to end the luxury tax on subject aircraft and vessels. The tax would cease to be payable after Budget Day (November 4, 2025). The luxury tax is still expected to apply to vehicles.
Canadian Entrepreneur Incentive (CEI)
The CEI introduced in Budget 2024 was intended to reduce the tax rate on eligible capital gains realized from selling certain qualifying business shares. Budget 2025 proposes cancelling the CEI.
Bare Trust Reporting
Budget 2025 proposes to defer certain bare trust reporting, such that these changes would only apply to taxation years ending on or after December 31, 2026 (technical amendments previously announced in August 2025).
Our plan: Building Canada strong — Part of Budget 2025.
