Major tax updates Canadians should be aware of this season
Tax season is about to begin in Canada.
The earliest Canadians will be able to file their taxes is this month on Monday, Feb. 23,Ā when the Canada Revenue Agency (CRA) Netfile service opens.
It doesn’t hurt to start prepping so that you don’t forget to claim any key tax credits and deductions in Canada.
“There are more than 400 credits and deductions that are available for us when we file a tax return, so there are a lot of things to consider,” H&R Block tax expert Yannick Lemay told Daily Hive.
Gerry Vittoratos, national tax specialist at UFile Canada, added that this is why it’s essential to be aware of changes in the federal budget.
“Usually, when the government makes announcements in the budget, [some of the measures] are in effect right away,” he explained to Daily Hive. “The government changed the budget to November, which means they’re not giving you much leeway to start benefiting from some of the changes they want to make.”
If you haven’t had a chance to do a deep dive on Ottawa’s 2025 budget, no sweat.
We’ve compiled major tax updates in Canada that could affect what you can claim and how much you get on your return.
Middle-class cut and tax bracket changes in Canada
Last July, the government introduced a middle-class tax cut, reducing the lowest marginal personal income tax rate from 15 per cent to 14.5 per cent for the year 2025. That was further reduced to 14 per cent as of Jan. 1, with the introduction of new income tax brackets for 2026.
The measure reduces the tax rate that is applied to the first $57,375 of an individual’s taxable income in 2025, regardless of their income level.
A majority of the tax relief goes to Canadians in the two lowest tax brackets (those with taxable income under $114,750 in 2025), including nearly half to those in the first bracket ($57,375 and below in 2025).
Ottawa said the maximum tax savings will be $420 per person and $840 per couple in 2026. All in all, this is expected to deliver over $27 billion in tax savings to Canadians over five years, starting in the 2025/2026 tax year.
Lemay said that the July tax cut means Canadians have paid a bit too much in taxes for the first six months of 2025.
“So 0.5 per cent more taxes during these first six months, and that tax saving will be reflected when you file your tax return,” he explained.
Canada Groceries and Essentials Benefit
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Last week, the federal government announced the Canada Groceries Essentials Benefit, which aims to offset the soaring prices of groceries for low-income Canadians.
It will do this by providing a one-time top-up payment equal to a 50 per cent increase in the annual 2025 to 2026 value of the GST credit, which is to be paid as early as possible this spring, and no later than June 2026.
Ottawa also plans on increasing the value of the Canada Groceries and Essentials Benefit by 25 per cent for five years, starting in July 2026. Both measures are still subject to Royal Assent.
According to Canada’s Department of Finance, the new benefit will be indexed to inflation and builds on the existing GST Credit, providing $11.7 billion in additional support over six years.
Although this will not affect your tax return, Lemay noted that if you’re eligible and want to receive this benefit, you will need to file your 2025 taxes on time.
“To receive [the one-time top-up] in June, your taxes need to be up to date when the payment is issued,” he explained.
He added that if you file your taxes a few months late, you can still receive the payment, but just at a later date.
However, Lemay warns Canadians not to wait too long because there is a time limit. Depending on the credit or benefit, you could miss out on extra cash from the government.
“For example, the GST credit, which has a 10-year period,” he said. “If you haven’t filed your 2015 tax return, then you just lost that credit, and the government will not pay it to you.”
Learn more about the new Canada Groceries and Essentials Benefit.
CRA can file a tax return on behalf of eligible individuals in Canada
In October, the government announced that it’s moving forward with giving the CRA authority to automatically file a tax return on behalf of low-income Canadians to ensure they receive the benefits they’re entitled to. This includes payments like the Canada Child Benefit and the GST/HST credit.
The automated and free process is expected to help millions of Canadians file their taxes. According to theĀ federal budget, the measure would apply to the 2025 and subsequent tax years, which means filing could begin this year. The CRA plans to scale up this initiative to 5.5 million people for the 2028 tax year.
While this may sound promising, Vittoratos says there may still be a lot of work in the back-and-forth between the agency and individuals.
For more details on the new initiative, check out our explainer.
Underused housing tax ends
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This Trudeau-era tax measure was a one per cent annual tax on non-resident, non-Canadian-owned residential real estate that was either sitting vacant or considered underused.
Prime Minister Mark Carney’s 2025 budget eliminated the tax for the year 2025 and beyond, which means this could reflect on some individuals’ tax returns.
Luxury tax on vehicles, aircraft, and boats removed
The 10 per cent tax on luxury cars or aircraft exceeding $100,000 and boats exceeding $250,000 was scrapped on Nov. 5, 2025. However, it still applies to certain vehicles priced above $100,000.
The tax measure has been in place in Canada since 2022.
Canada Carbon Rebate
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The consumer carbon tax was officially scrapped on April 1, meaning that residents of Alberta, Manitoba, Ontario, Saskatchewan, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island no longer pay the federal fuel charge.
The end of the carbon tax also came with the removal of the Canada Carbon Rebate, with the last payment being issued in April 2025. However, eligible Canadians who haven’t filed a 2024 tax return can still get the payment if they submit it before Oct. 30, 2026.