We also have answers from the experts you won’t find anywhere else, thanks to our back catalogue of Ask MoneySense columns. But first, let’s look at what’s different this year.
What’s new for the 2025 tax year?
New bottom-bracket tax rate: As part of its platform in the August 28, 2025, federal election, the Liberal party promised to lower the tax rate on your first $57,375 of income to 14% from 15%. After the Liberals won, the government implemented the change as of July 1, 2025. As a result, the effective tax rate for 2025 splits the difference at 14.5%. Barring further rate changes, the rate on this bottom tax bracket for the 2026 tax year will be a flat 14%.
Don’t wait for a paper return: The Canada Revenue Agency (CRA) is discontinuing its practice of proactively sending paper returns to filers who have used them in the recent past. Last year just 7% of tax filers used paper returns, and the number shrinks a bit more every year. If you want to file a paper return, you can:
Order one from CRA’s website to be mailed to you.
Phone CRA at 1-855-330-3305 to order one.
Pick up a blank T1 form at a post office or other federal office.
Alternatively, you can find out more about filing online at CRA’s tax software page. Make filing digitally easier with CRA’s Auto-fill my return service. Eligible low-income filers can also make use of the SimpleFile service or free tax clinics offered by not-for-profit organizations.
New Canada Disability Benefit: Canadian residents of working age certified to receive the Disability Tax Credit are now eligible to receive up to $200 per month based on household net income. The Canada Disability Benefit became available in June 2025, but if you enrol now, you will receive payments retroactive to that date.
No more Digital News Subscription Tax Credit: This tax credit worth up to $75 per year for subscriptions to Canadian news organizations has been discontinued.
2025 income tax guide table of contents
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Important dates and deadlines
Find out when you can expect your T4, your last chance to contribute to your registered retirement savings plan (RRSP), when to file your return and so much more. These are your 2025 income tax return deadlines.
What happens if you miss the income tax deadline in Canada?If you owe income tax in Canada you have to pay interest on the balance owning. You begin incurring interest payable the day after the deadline: May 1, 2026. You could owe 5% of your balance owing, plus 1% for each full month you don’t file. Missed three years of income tax returns? You could owe 10% on your balance owed, plus an additional 2% for each month between the due dates and when you file your returns.
Read more on tax deadlines: Can you file multiple years of income taxes together in Canada?Late filers: Get your back taxes sorted before year-end
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Selling assets? Read our capital gains guide
How much tax will you pay for 2025?
Though the bottom line on your tax return often comes as a surprise, there are ways you can estimate your taxes owing or refund based on what you’ve already paid (found on your T4 slip from your employer or installments if you are self-employed) and your tax bracket. In fact, this information can help you determine when and how much to contribute to your RRSP or donate to charity and ultimately minimize the taxes you pay. Here are the federal tax brackets:
* Following through on an election promise, the Liberal government lowered the tax rate on the lowest bracket to 14% from 15% previously, effective July 1, 2025. The applicable rate for all of 2025 is the average of the two for each half of the year, or 14.5%.
Note that all Canadians are eligible for a tax credit known as the basic personal amount. For 2025, the basic personal amount is set at $16,129 (it rises every year to account for inflation). There is no income tax on your first $16,129 of income for the year, in other words.
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Provinces and territories have their own income tax brackets. Look up the additional income tax you owe based on where your primary residence is located using MoneySense’s guide to tax brackets in Canada.
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How to file an income tax return in Canada
There are multiple ways to prepare and file your personal income tax return. You can do it yourself, either in digital form or on paper, you can use an online tax prep tool or software, or you can hire a bookkeeper or accountant to do it for you. Whatever method you choose, make sure you understand the process, your claims and whether you have a balance owing or will be receiving a refund.
If you haven’t done so already, sign up for the CRA’s My Account. This personalized portal keeps track of the returns you’ve already filed, notices of assessment, taxes owing, and upcoming deadlines. It also enables you to manage transfers of funds to and from the CRA. Use it to look up how much room you have to contribute to your RRSP or TFSA.
In addition, tax software platforms enable you, with your permission, to sync your T1 return with your CRA account page and populate it with information there, including all official documents for the current tax year—which can save you time and bother in preparing your taxes.
Read more about filing income taxes:How to fill out a personal income tax returnHow to file your taxes online in CanadaHow to set up CRA direct deposit
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Business, investment, and other income
Conventional employment income is relatively easy to track—and for the CRA to track you. Your employer(s) is required to send you a T4 slip in the first two months of the year that records your earnings, income tax paid at source, Employment Insurance (EI), Canada Pension Plan (CPP), and other deductions.
