In 2025, the Federal Government is implementing new tax changes in Canada that will impact individuals and business owners. In this months’ blog, the team here at McNabb Lucuk LLP highlights key changes to give our readers in Grande Prairie, and across Alberta, a brief understanding on impacts of the changes at tax time. 

RRSP Contribution Limit Increase

The Registered Retirement Savings Plan (RRSP) contribution limit has risen to $32,490 for the year of 2025, up by $930 from 2024. This increase allows Canadian income earners to defer more of their annual income from immediate taxation to encourage additional personal savings for retirement. This annual limit accrues, meaning any unused contribution room from previous years can be utilized in future years. Refer to your personal tax return for individual lifetime contribution limit. 

TFSA Contribution Limit Increase

The Tax-Free Savings Account (TFSA) annual contribution limit for 2025 is once again set at $7,000. Cumulative contribution room for the TFSA depends on the age of the contributor. Those eligible since 2009, or born in or before 1991, have a cumulative contribution total of $102,000 in 2025, which can be held in one of multiple accounts. 

First Home Savings Account (FHSA)

The FHSA was introduced in 2023 to assist first-time homebuyers by combining the tax benefits of an RRSP and TFSA accounts. The 2025 annual contribution limit remains the same at $8,000 with a lifetime contribution limit $40,000. For those who qualify, contribution room is accrued only after the account is opened but can be carried forward.  For information on eligibility, visit canada.ca

First Time Home Buyers Plan (HBP)

In 2024, the government increased the withdrawal limit from individual RRSP accounts to $60,000 for the purchase of a home under the Home Buyers Plan (HBP). For eligible couples, both partners can withdraw up to the $60,000 limit. It’s important to remember that withdrawals are received tax-free only if repaid within the allocated recontribution timeframe and those contributions are not eligible for tax credit.  

Canada Pension Plan (CPP) Updates

CPP contribution rates continue to rise as part of a multi-year enhancement to bolster retirement benefits. For 2025, the employee and employer contribution rates are expected to increase, affecting payroll deductions and business expenses.

Federal Tax Bracket Adjustments

Federal income tax brackets for 2025 have been adjusted for inflation, raising income thresholds. This change means a larger portion of income is taxed at lower rates, potentially reducing overall tax liability.

Basic Personal Amount (BPA) Increase

The BPA, the income level exempt from federal tax, has increased to $16,129 for 2025, up from $15,705 in 2024. This rise provides modest tax relief, especially for lower-income earners.

Proposed Capital Gains Tax Changes

The government has proposed increasing the inclusion rate for capital gains from 50% to 66.7% for gains exceeding $250,000, effective June 25, 2024. This change aims to generate additional revenue for social programs but has faced criticism for potentially discouraging investment.

GST/HST Holiday on Select Items

The temporary GST/HST holiday is expected to continue from December 2024 into February 2025. You may have noticed the decreased cost at the cash register during holiday shopping and at restaurants. 

Staying informed about 2025 Federal tax programs and their changes can help you make strategic decisions about your personal and business financial plans. Consulting with a trusted tax professional can take that planning to the next level while helping you to prepare for what’s ahead. Contact our team at McNabb Lucuk LLP for up-to-date information and advice.