Key Tax Changes for 2025
As we enter the new year, it's important to be aware of the significant tax changes that have come into effect on January 1, 2025. These adjustments are automatically built into the plans we create to ensure accuracy of your plan for today, and in the future.
If you’re lost reading this article, you’re not alone. Taxes are confusing. If you are concerned how this may affect your retirement strategy or plan, please reach out.
Tax Rates & Tax Changes
Both federal and provincial marginal tax rates have been adjusted to reflect potential new income thresholds, primarily due to high inflation. The indexation increase from 2023 to 2024 was 4.7%, while for 2024 to 2025, it's 2.7%.
Federal Tax Rates
| Rate | To | Tax Rate |
|---|---|---|
| $57,375 | $114,750 | 20.50% |
| $114,750 | $177,882 | 26.00% |
| $177,882 | $253,414 | 29.32% |
| $253,414 | $- | 33.00% |
Notable Changes
The OAS clawback threshold has increased from $90,997 to $93,454 for 2024 to 2025.
Maximum QPP/CPP Pensionable Earnings
The 2024 QPP/CPP maximum pensionable earnings were $68,500.
The 2025 QPP/CPP maximum pensionable earnings are $71,300.
The basic exemption remains at $3,500.
A new "CPP2" and "QPP2" contribution rate of 4% applies to pensionable earnings between $71,300 and $81,200. For more information, visit: https://www.canada.ca/en/services/benefits/publicpensions/cpp.html
QPP/CPP Contribution
The maximum employee contribution % for CPP remains at 5.95% in 2025 (the maximum is now $4,034.10 for 2025 due to the increased maximum pensionable earnings).
For QPP, the employee contribution % remains at 6.4% (the maximum is now $4,339.20 for 2025).
A new "CPP2" and "QPP2" contribution rate of 4% applies in 2025 for pensionable earnings between $71,300 and $81,200.
Maximum EI Insurable Earnings
The maximum EI insurable earnings have increased from $63,200 in 2024 to $65,700 in 2025.
EI Contribution
The maximum employee contribution % for EI is 1.64% in 2025, or a maximum of $1,077.48 in all Provinces except Quebec.
Federal Age Amount/Provincial
The Age Amount (claimable by clients 65 or older) has increased to $9,028 for 2025 (the minimum clawback threshold is $45,522). Provincial amounts and thresholds have also increased.
Tax Free Savings Account (TFSA) Contribution Room
The TFSA room for 2025 remains at $7,000 (it was $7,000 in 2024).
The max TFSA contribution is $102,000.
RRSP Maximum Contribution Room
The RRSP maximum room has increased from $31,560 in 2024 to $32,490 in 2025.
Your total RRSP room contribution will be dependent on previously filed returns and the amount of income earned during those periods.
Lifetime Capital Gains
The lifetime capital gains exemption remains $1,125,000 for 2025 but will be indexed after 2025.
QPP/CPP Payments & Info
The updated payouts are not available yet. Currently $1,364.60 per month as a maximum for CPP and QPP.
OAS Payments
The updated payouts are not available yet. Currently $713.34 per month as a maximum for OAS ($784.67 for clients 75 years old or older).
OAS Claw Back
The OAS clawback threshold increased from $90,997 to $93,454 for 2024 to 2025.
Important Note: This information is for general guidance only and should not be considered a substitute for professional tax advice. Always consult with a qualified tax advisor to ensure your specific circumstances are properly addressed.
