What's New for the 2025 Tax Year: CRA Changes You Need to Know

Every year, CRA adjusts tax brackets, credit amounts, and contribution limits for inflation. Some years also bring policy changes that fundamentally affect how you file your personal tax return. Here's what changed for the 2025 tax year and how it impacts your return.

Federal Tax Brackets (2025)

All federal income tax brackets are indexed annually for inflation. For 2025, the brackets are:

• 15% on the first $57,375 of taxable income
• 20.5% on $57,375 to $114,750
• 26% on $114,750 to $158,468
• 29% on $158,468 to $220,000
• 33% on income over $220,000

Note: These are federal rates only. Your provincial tax brackets apply on top of these. Check your province's rates for your total combined rate.

Basic Personal Amount

The federal Basic Personal Amount (BPA) — the amount of income you can earn tax-free — has increased to $16,129 for 2025. This is the amount claimed on Line 30000 of your return. Higher-income earners (over $173,205) receive a reduced BPA.

RRSP and TFSA Limits

• RRSP contribution limit: $32,490 (or 18% of previous year's earned income, whichever is lower) plus any unused room
• TFSA annual contribution limit: $7,000
• TFSA cumulative room (if you were 18+ in 2009 and always a Canadian resident): $102,000
• FHSA annual limit: $8,000 ($40,000 lifetime)

CPP and CPP2 Changes

The CPP enhancement continues its phase-in:

• CPP maximum pensionable earnings: $71,300
• CPP2 upper earnings limit: $81,200
• Employee CPP contribution rate: 5.95% (first ceiling) + 4% (CPP2 between first and second ceiling)
• Self-employed: Both employer and employee portions (11.9% + 8% on CPP2 earnings)

If you're self-employed, the additional CPP2 contributions mean a slightly higher tax burden, but also higher eventual pension benefits.

EI Premiums

• Maximum insurable earnings: $65,700
• Employee premium rate: 1.64%
• Maximum annual employee premium: $1,077.48

Capital Gains Inclusion Rate

One of the most significant changes in recent years: the capital gains inclusion rate increased from 50% to 66.67% for gains realized after June 25, 2024, for amounts over $250,000 annually for individuals. The first $250,000 of capital gains in a year remains at the 50% inclusion rate.

For corporations and trusts, the 66.67% inclusion rate applies to all capital gains (no $250,000 threshold).

This means if you sold investments, property, or other capital assets in 2025, your return may require careful calculation of which inclusion rate applies to which portion of your gains.

Alternative Minimum Tax (AMT) Changes

The modernized AMT rules that took effect in 2024 continue to apply for 2025:

• AMT rate increased to 20.5% (from 15%)
• AMT exemption increased to $173,205
• Broader base of income subject to AMT, including more capital gains and stock option benefits

If you have significant capital gains, stock options, or large charitable donation claims, the AMT calculation may affect you. Most tax software handles this automatically, but it's worth understanding why your tax bill might be higher than expected.

Vehicle and Travel Deduction Limits

• CCA ceiling for passenger vehicles: $37,000 + tax
• Lease payment ceiling: $1,050/month + tax
• Loan interest ceiling: $350/month
• Tax-exempt mileage allowance: $0.72/km (first 5,000 km), $0.66/km thereafter

Home Office Reminder

As a reminder, the temporary flat rate method for home office expenses is no longer available — it ended after the 2022 tax year. For 2025, you must use the detailed method if you're claiming home office expenses. This means calculating your actual expenses and the business-use percentage of your home. See our detailed guide on home office deductions.

Digital Platform Reporting

Starting with the 2024 reporting year, digital platforms (like Airbnb, Uber, Etsy, etc.) are required to report seller/provider income to CRA. If you earn income through digital platforms, CRA now has this information — make sure you're reporting it on your return. If you've received a CRA letter about unreported platform income, don't ignore it.

What This Means for You

Most of these changes are automatic — your tax software will apply the updated brackets and limits. But a few things deserve your attention:

• If you had significant capital gains in 2025, understand the new tiered inclusion rate
• If you're self-employed, budget for higher CPP/CPP2 contributions
• If you work from home, make sure you're tracking expenses for the detailed method
• If you earn income from digital platforms, CRA knows — report it

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