2025 Federal Budget Highlights - What's New for Individuals and Families

The Government of Canada released its 2025 Federal Budget, titled "A Stronger Canada, for Everyone." Here's a quick look at what's proposed for personal tax filers this year. 

Personal Income Tax

• The lowest federal tax rate will drop from 15% to 14.5% in 2025 - and to 14% in 2026 - providing modest savings for low- and middle-income Canadians. 
• Tax brackets remain unchanged, and standard idexation continues.

Key Tax Credits and Deductions

• Basic Personal Amount: $16,129 for 2025.
• New Top-Up Credit: Added relief for taxpayers whose non-refundable credits exceed the first-bracket threshold.
• Personal Support Worker Credit (PSWC): Starting in 2026, eligible PSWs can claim 5% of qualifying income (up to ~$1,100).
• Medical Expenses & Home Accessibility Credits: No double-claims allowed beginning 2026. 

Registered Plans

• No announced changes to RRSP, TFSA, or FHSA contribution limits.
• Regular annual indexation still applies.

Housing Measures

• GST Rebate for First-Time Home Buyers: Elimination of GST on new homes valued up to $1 million (and partial rebate up to $1.5 million).
• Par of the new Build Canada Homes Program to encourage new-home construction

Families and Children

• Launch of a National School Food Program, offering free meals to ~400,000 children nationwide. 
• CRA may begin auto-filing simple tax returns for eligible low-income Canadians starting 2025. 

Seniors and Retirees

• No change to OAS/GIS or pension-splitting rules. 
• Ongoing review of the Canadian Disability Benefit and related supports

Clean & Green Measures

• Budget expands business clean-investment incentives but introduces no new personal "green" tax credits this year. 

Joint Bank Accounts and Bare Trusts (T3 Filing)

Many common joint bank accounts (e.g., parent & adult child) can be considered bare trusts when one person is on title but the funds truly belong to someone else. The CRA waived T3/Schedule 15 filing for bare trusts for the 2023 and 2024 tax years unless the CRA specifically requests a return. 

What about 2025? As of November 4, 2025, Finance Canada has proposed amendments to narrow and clarify the rules, but they are not yet enacted. The CRA has indicated it won't require bare trusts to file for the 2025 tax year unless new legislation is enacted well in advance of the filing deadline (spring 2026). Watch for final guidance; otherwise, filing may effectively be pushed to 2026 (for 2025 year-ends) if legislation isn't passed in time. 

Practical Tip: For higher-balance joint accounts, keep records showing who contributed the funds and who benefits. If you think a joint account might be a bare trust, check in with us before tax time so we can confirm whether a T3 return is needed based on the final rules. 

Filing & CRA Administration

• CRA will gain new authority to prepare and file basic returns for eligible low-income individuals. 
• No change to regular filing dates - April 30, 2026 remains the T1 deadline. 

What this Means for You

Small changes can still make a difference. The lower 14.5% tax rate benefits most working Canadians; the new housing rebate could mean thousands in savings for first-time buyers.

As always, we recommend reviewing your 2025 tax strategy early - especially if you expect home-purchase, retirement-income, or credit-eligibility changes this year. 

Interested in learning more about the 2025 Federal Budget? Manulife Financial has also released their summary, highlighting key measures that may affect individual taxpayers, businesses, and investors. The report provides insights into proposed tax changes, saving initiatives and broader economic impacts. 

Click here to read Manulife's summary.

Prepared by Macnaughton and Ward Financial Services Ltd. Information current as of November 2025. This summary if for general guidance only and not intended as tax advice. Please consult your advisor before acting on any information above.