New Tax Cut Slashes Rates for Millions of Canadians
Starting July 1, 2025, millions of Canadians will see a lighter tax bill—and more money in their pockets. The federal government just announced a major income tax cut, and it’s set to deliver serious savings to the middle class.
Who Benefits Most from the Tax Cut?
Nearly 22 million Canadians will feel the impact of this change. In fact, the government is lowering the tax rate on the first $57,375 of income for everyone, no matter how much you earn. Most of the savings will flow to people in the two lowest tax brackets, with those earning up to $57,375 getting 45% of the total relief. If you make between $57,375 and $114,750, you’ll receive 41% of the benefits.
Meanwhile, higher earners will see smaller slices of the pie—just 9%, 3%, and 2% for the top three brackets. But for most Canadians, this means real, meaningful savings.
How Much Will You Actually Save?
The numbers are impressive. Each person could save up to $420 per year, and couples could pocket $840 together in 2026. Over five years, the government expects Canadians to save a whopping $27 billion in total.
Starting this July, the tax rate for the rest of 2025 drops to 14.5%. Then, in 2026 and beyond, it falls even further to 14%. The Canada Revenue Agency is updating its tables now, so your employer will start deducting less tax from your paycheque as soon as July 1. If you’re self-employed or have other income, you’ll see your savings when you file your 2025 tax return in spring 2026.
Why This Tax Cut Matters
With living costs on the rise, every dollar counts. This new tax cut is a direct response to the financial pressures facing Canadian families. It’s designed to put more money back into your wallet, helping you keep up with groceries, rent, and other essentials.
What Happens Next?
If you’re employed, you’ll notice the change right away—less tax will come off your paycheque starting in July. For everyone else, the savings will show up when you file your taxes next year. Either way, it’s a win for hardworking Canadians.
Bottom Line
This new tax cut is a big deal. It’s simple, straightforward, and puts real money back into the hands of millions. So, get ready for a little extra cash—and a little more breathing room—thanks to Canada’s latest tax relief plan.
