What's new for 2025

Federal tax rate - In July 2025, the lowest income tax rate was reduced from 15% to 14.5% (prorated to 14%). The rate will be 14% for 2026 and future tax years.

Final CPP/QPP enhancement (2019 to 2025) - The Canada and Quebec Pension Plan enhancements were introduced through a 7-year gradual phase-in starting on January 1, 2019. Starting 2025, the YAMPE was approximately 14% above the YMPE, increasing from approximately 7% in 2024. This means employees whose income reached the 2025 YAMPE (81,200) would see an increase in C/QPP2 (from $188 in 2024) to $396 in 2025.

T4 and RL-1 codes for reporting 2025 capital gains (including stock benefits)

• Federal - There is flexibility regarding which codes to use to report capital gains:

  • For the 2025 tax year, either codes 38, 39/41 or codes 90, 91/92 can be used, based on an employer’s preference.

  • In future tax years, codes 38, 39/41 will be the correct codes to use.

Revenu Quebec - To report capital gains:

• For the 2025 tax year, RL-1 Box A, Box L, code L-9 (non-CCPC) or L-10 (CCPC) are the correct codes to use.

Prince Edward Island - Increased the basic personal amount from 13,500 to 14,250 starting January 2025. At that time, personal income tax thresholds were raised and the tax rates were reduced on the first 4 income thresholds. In July 2025, there was an additional increase to the basic personal amount, from 14,250 to 14,650 (prorated to 15,050).

Manitoba - Phased out the basic personal tax credit amount for individuals with a net income range between 200,000 and 400,000, effective January 2025. In July 2025, the basic personal amount of 15,969 was reduced to 15,780 (prorated to 15,591). Income tax thresholds were also reduced, to remove the indexation that had been applied since January 2025.

Nova Scotia - Made changes starting January 2025 to index personal income tax brackets and the following tax credits; the basic personal amount, spousal amount, dependant amount, infirm dependant amount and age amount.

• On April 1, 2025, the HST rate decreased from 15% to 14%. This reduction of the provincial portion (from 10% to 9%) could impact taxable benefits subject to HST.

• In July 2025, the basic personal amount was officially fixed at 11,744. The dynamic basic personal amount calculation will be removed for 2026 and future tax years.

Alberta - In July 2025, introduced a new lowest tax threshold (8% on income < 60,000) and a Supplemental tax credit of 2% (referred to as K5P).

Saskatchewan - In July 2025, there was an increase to the basic personal amount, from 18,991 to 19,491 (prorated to 19,991).

Quebec Health Services Fund (QHSF) - The upper total payroll threshold for the Health Services Fund (beyond which the rate is 4.26%) increased in January 2025 (from 7.5M to 7.8M) based on indexation.

Manitoba Health and Education Levy (HE Levy) - Following an announcement on March 4, 2025, HE Levy for payroll paid from February to April 2025 could be deferred to June 15, 2025.

Ontario Employer Health Tax (ON EHT) - Following an announcement on April 7, 2025, ON EHT could be deferred for a six month period from April 1, 2025 to October 1, 2025.

Saskatchewan Workers’ Compensation Board - Starting January 2025, directors receiving wages reported on a T4 are no longer included in the definition of a worker. As a result, earnings of directors are not included as assessable wages. Refer to Saskatchewan’s Fact sheet on “Reporting directors of corporations to the WCB” for details.

British Columbia Pay Transparency Reporting - By November 1, 2025 employers with 300 or more BC employees were required to complete and post a pay transparency report for the first time. The process involves an analysis of employees’ salary, hours worked, bonus pay, overtime pay and overtime hours. An online reporting tool is available to assist employers. The requirement for this report will extend to employers with 50 or more BC employees by November 1, 2026.