Post-Election Tax Shifts: What Canadians Can Expect
With the Liberal Party securing another term under Prime Minister Mark Carney, tax reform remains a central part of the agenda. From income tax cuts to targeted relief for seniors and frontline workers, the government is aiming to ease financial pressure on Canadians.
Here’s a breakdown of the key tax changes proposed—and when they might take effect.
Lower Income Tax for 22 Million Canadians
A key promise is a 1% cut to the lowest federal income tax bracket, reducing it from 15% to 14%. While modest, this adjustment is projected to benefit over 22 million Canadians, with average savings of up to $825 annually for lower- and middle-income families.
Relief for Seniors with RRIF Withdrawals
For retirees relying on Registered Retirement Income Funds (RRIFs), the Liberals propose a 25% temporary reduction in mandatory withdrawals. This would give seniors more flexibility to manage investments during market volatility and defer taxable income.
GST Break on Home Heating Bills
To help Canadians cope with rising utility costs, particularly in colder provinces, the Liberals aim to temporarily eliminate GST on home heating. The 5% tax break could save households hundreds of dollars during the winter season.
Healthcare Workers to Receive New Tax Credit
To support Personal Support Workers (PSWs) and retain talent in a stressed sector, a refundable $1,100 annual tax credit is on the table. Unlike traditional credits, this one offers full benefits even for low-income earners.
This credit complements the planned expansion of training programs under the Union Training and Innovation Program (UTIP), reinforcing long-term workforce development in healthcare.
When Will These Changes Take Effect?
Most of the proposed tax relief measures are expected to roll out in phases starting in late 2025, with broader implementation tied to the 2026 federal budget.
Key changes like the GST exemption on heating may come into effect before the 2025–26 winter, while RRIF relief and PSW tax credits are likely to be implemented by 2026, with impact showing up in 2027 tax filings.
Bottom Line
While the proposed reforms promise relief, Canadians should stay informed about timelines and eligibility. The Carney government’s focus on affordability reflects broader public concerns—and if executed as outlined, the next two years could bring meaningful tax relief to households across the country.
