Lowest Marginal Rate Reduced from 15% to 14.5%

March 4, 2026

As of July 1, 2025, the lowest marginal personal income tax rate was reduced from 15% to 14%. Visit here for more information.


Here’s what that means:

  • The reduced rate applies to the first $57,375 (2025) of taxable income
  • Nearly 22 million Canadians are expected to benefit
  • Maximum savings of $420 per person and $840 per couple (in 2026)
  • Over $27 billion in tax savings projected over five years (starting 2025–26)
  • The majority of relief will go to individuals in the two lowest tax brackets

 

Because the change takes effect mid-year:
• The effective full-year rate for 2025 will be 14.5%
• The rate will be 14% in 2026 and future years

 

🔎 New Top-Up Tax Credit (TTC)
If you claim certain non-refundable tax credits, you may be eligible for the new Top-Up Tax Credit (TTC). This credit effectively maintains a 15% rate for certain non-refundable credits on amounts above the first bracket threshold ($57,375 in 2025).

The Canada Revenue Agency will update payroll deduction tables for July - December 2025, meaning many employees may see reduced tax withholdings starting July 1. Otherwise, savings will be realized when filing 2025 tax returns in spring 2026. Visit here for more information.

 

Have questions about how this impacts your 2025 tax planning? Our team at Ward & Uptigrove is here to help. 💼

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