Changelog
Material changes to Canadian tax rules affecting the self-employed, sole proprietors, and CCPC owner-managers. Reverse chronological order. Statute and budget references where available.
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- Reversed
Proposed capital gains inclusion rate increase cancelled
Prime Minister Carney's government cancelled the proposed increase to the capital gains inclusion rate (from 50% to 66.67% on gains above $250,000 for individuals and on all corporate gains). The 50% inclusion rate is confirmed for 2025 and beyond. CRA reissued guidance and reversed any 2024 prepayments under the proposed regime.
- Federal
Federal first bracket reduced to 14%
The federal personal income tax rate on the first bracket dropped from 15% to 14%, effective July 1, 2025. For the 2025 tax year as a whole, the CRA applies a blended rate of 14.5%. Full 14% applies from 2026 onward.
- CPP/EI
CPP enhancement — second additional contribution (CPP2)
Second year of CPP2 in effect. A 4% contribution (employee + employer, or 8% self-employed) applies to pensionable earnings between the YMPE ($71,300) and the YAMPE ($81,200). Maximum CPP2 contribution: $396 for employees, $792 for self-employed.
- Provincial
Alberta introduces new 8% first bracket
Alberta added a new 8% provincial bracket on the first $60,000 of taxable income (down from a single 10% rate on the first $151,234). Higher brackets unchanged.
- Provincial
Nova Scotia HST reduced from 15% to 14%
Nova Scotia's combined HST rate dropped from 15% (5% GST + 10% provincial) to 14% (5% GST + 9% provincial), effective April 1, 2025. Registrants must apply the new rate to supplies made on or after the effective date.
- Provincial
Nova Scotia BPA clawback eliminated
The Nova Scotia basic personal amount is now a flat $11,744 for all taxpayers. The previous income-tested reduction that phased the BPA down for higher earners has been removed.
- Provincial
PEI brackets restructured
Prince Edward Island moved from three brackets plus a 10% surtax to five brackets with no surtax. Effective rates at the top end are broadly similar; mid-income earners see a modest reduction.
- Registered
TFSA annual limit holds at $7,000
The Tax-Free Savings Account contribution limit remains $7,000 for 2025 (unchanged from 2024). Cumulative room since 2009 for an eligible Canadian who has never contributed: $102,000.
- Registered
RRSP dollar limit rises to $32,490
The Registered Retirement Savings Plan annual contribution limit increased to $32,490 for 2025, applied to 18% of prior-year earned income. The deadline to deduct against 2025 income is March 2, 2026.
- Federal
Lifetime Capital Gains Exemption raised to $1.25 million
The LCGE on qualified small business corporation shares and qualified farm or fishing property was indexed and increased to $1,250,000, up from $1,016,836. The increase applies to dispositions on or after June 25, 2024.
- Federal
AMT reform enacted (Bill C-69)
The Alternative Minimum Tax was overhauled. The AMT rate increased from 15% to 20.5%, the basic exemption was raised to $173,205, and the calculation base broadened (50% of capital gains, 100% of employee stock-option benefits, 30% of capital gains on donated public securities). Effective for 2024 and later tax years.
- Reversed
Federal Budget 2024 — capital gains increase proposed (later cancelled)
The 2024 federal budget proposed raising the capital gains inclusion rate to 66.67% above $250,000 for individuals (and on all gains for corporations and most trusts) from June 25, 2024. The proposal was deferred, then formally cancelled by the Carney government in March 2025. The 50% inclusion rate continues to apply.