Canadians will be paying more federal income tax next year, according to the Canada Revenue Agency (CRA).
The CRA revealed the federal tax brackets for 2025, adjusted for inflation. While federal tax rates are the same, the income thresholds for each bracket have shifted.
In 2025, the indexation increase will be 2.7%, which is lower than the 4.7% in 2024, according to the agency.
This is how much income tax you’ll have to pay next year based on your bracket:
- Less than or up to $57,375 — 15%
- Between $57,375 and $114,750 — 20.5%
- Between $114,750 and $177,882 — 26%
- Between $177,882 and $253,414 — 29%
- $253,414 and over — 33%
This comes after the federal government implemented the capital gains tax in June, which increased the inclusion rate from one-half to two-thirds for any Canadian or corporation that makes over $250,000 per year in capital gains.
The tax hike only impacts a small portion (0.13%) of the wealthy population.
“An increased Lifetime Capital Gains Exemption would ensure most middle-class entrepreneurs won’t pay more tax because of these changes, and the new Canadian Entrepreneurs’ Incentive would encourage entrepreneurs to invest in capital-intensive and high-growth sectors,” Canada’s Department of Finance stated.
When it was first announced, Canadians ripped on the wealthy upset by the capital gains tax hike, and certain industries like the medical field said the hike could push doctors to quit.
You can find more information on your income tax bracket here.