Earlier this week the Minister of Finance tabled the 2025 Federal Budget. Here are some highlights that I thought you would be most interest in.
Personal Support Workers Tax Credit
A temporary refundable credit is available for eligible personal support workers employed by qualifying health care institutions. Workers may receive 5% of eligible earnings, up to $1,100 per year, from 2026 to 2030. Eligibility requires employer certification.
Automatic Federal Benefits and Tax Filing
Starting with 2025 tax returns (filed in 2026), CRA can automatically file tax returns for certain low-income Canadians. Criteria include all income reported via tax slips, income below the basic personal amount, and a history of non-filing. There is an opt-out option.
Top-Up Tax Credit
From July 1, 2025, the first marginal tax rate drops from 15% to 14%. To prevent adverse impacts for those with large non-refundable credit claims, the new Top-Up Tax Credit keeps a 15% value on credits above the first income bracket ($57,375 in 2025). This applies from 2025-2030.
Home Accessibility & Medical Expense Tax Credits
Expenses claimed for the Medical Expense Tax Credit can no longer be used for the Home Accessibility Tax Credit for 2026 and subsequent years.
Canada Carbon Rebate Program
The federal fuel charge ends April 1, 2025. The final Canada Carbon Rebate payment issues that month. No CCR payments will be processed for returns or requests submitted after October 30, 2026.
EI Parental Benefits—Bereavement
Parental EI claimants can receive up to eight additional weeks of benefits if a child passes away, offering extended support during bereavement.
Early Retirement Options for Frontline Public Servants
Eligibility for unreduced pensions after 25 years’ service, or at age 50 with 25 years’ combined service, is extended to firefighters, border services officers, and parliamentary protection officers.
Canada Disability Benefit Enhancements
Maximum benefit for July 2025–June 2026 is $2,400 annually, inflation-adjusted. The benefit will be exempt from income tests. A one-time $150 supplemental payment will go out for each Disability Tax Credit certification or re-certification linked to the Canada Disability Benefit. Payments start before the end of 2026-2027 and will be retroactive.
Bare Trust Reporting Deferral
Reporting requirements for bare trusts have been deferred. Enhanced trust reporting starts for most trusts after 2024; bare trusts remain exempt for 2023 and 2024 tax years.
Please contact me if you have questions about how these changes may impact your financial plans.
As always, if you have any questions or would like to discuss how these changes may impact your financial plan, give me a call.
Have a great weekend,
Tracey & Paige
Sources:
2025 Federal Budget Analysis https://www.mackenzieinvestments.com/en/services/tax-and-estate-planning/federal-budget/federal-budget-2025-analysis?utm_source=sfe&utm_content=cta&cid=0:eml:efu:0:0:0:20251106:cta:0&utm_source=journ&utm_term=Read+the+full+analysis-cta2&utm_content=340195&utm_id=571e8f7a-d609-48be-bae7-bcc31708b20e&sfmc_activityid=d664ad76-8603-489e-bc96-9793b401b509&utm_medium=eml&utm_campaign=EFU-4516850-Federal-Budget-Attendee-11062025-EN
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