Prime Minister Mark Carney's government tabled Budget 2025 on Tuesday afternoon, and it's packed with measures that could affect your wallet, your taxes and even your plans to watch Canada compete in an international singing competition.
Finance Minister François-Philippe Champagne has called it "an investment budget" and "a generational shift," though opposition parties remain skeptical about balancing what Carney promised would be "austerity and investment at the same time."
The 493-page federal budget projects a deficit of $78.3 billion for 2025-2026 — significantly higher than the $48.3 billion projected in the Fall Economic Statement, and even higher than the $68.5 billion estimate forecast by the Parliamentary Budget Officer in September.
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While Budget 2025 includes major spending on big-picture items like infrastructure, defence and housing, we've cut through the hundreds of pages to find the updates that could be interesting to everyday Canadians.
From middle-class tax relief already in effect to banking fee reviews and new tax credits and benefit payments, here's what you need to know about the budget announcements that could impact your finances and daily life.
Middle-class tax cut
If you've noticed a bit more money in your paycheque since July, you're not imagining it. The government lowered the first marginal personal income tax rate from 15% to 14% on July 1, 2025, applying to taxable income up to $57,375.
While this has already been in effect and reflected in the CRA's tax withholding tables, the legislation hasn't passed yet — it's currently before Parliament as part of Bill C-4. But assuming it does, nearly 22 million Canadians will benefit from tax relief of up to $420 per person, with two-income families saving up to $840 a year.
The majority of relief goes to people in the two lowest tax brackets, but this is technically a tax cut for everyone who pays income tax — even high earners get that same dollar amount back on the first $57,000 or so of their income.
The measure is expected to cost $27.2 billion over five years starting in 2025-26 — one of the largest single line items in this year's budget.
Reviewing banking fees
Budget 2025 announces that the government will review fees charged by banks and other federally regulated financial institutions, including Interac e-Transfer fees and ATM fees. According to the budget, officials will "use every tool and agency at our disposal to address any unjustified fees and pain points for Canadians" and provide an update in 2026.
The budget also proposes raising the amount of immediately available funds when you deposit a cheque from $100 to $150, and removing the timing distinction between funds deposited in person versus other methods.
Regulations coming in the next few months would also reduce how many days banks can hold your deposited cheque funds before releasing them, and raise the threshold below which shorter hold periods apply from $1,500 to an unspecified higher amount.
Eliminating GST for first-time homebuyers
As announced earlier this year, the government wants to eliminate the GST (or 5% federal portion of the HST) for first-time home buyers on new homes up to $1 million, and reduce it for first-time buyers on new homes between $1 million and $1.5 million. The removal of the GST is currently before Parliament as part of Bill C-4.
This measure would apply only to newly built homes and only to first-time buyers, but for those who qualify, it would immediately bring down the cost of homeownership by up to $50,000 on a $1 million home.
New disability supports
The Canada Disability Benefit (CDB) started issuing payments in July 2025, but the upfront cost of getting the Disability Tax Credit (DTC) certificate — which is required in order to qualify for the CDB — can be an expensive obstacle for some applicants.
Budget 2025 proposes a one-time supplemental payment of $150 for each DTC certification or re-certification that leads to a CDB entitlement.
The payment would be retroactive to the benefit's launch, with the first supplemental payments expected before the end of 2026-27.
The budget also reaffirms the government's intention to exempt the CDB from being treated as income under the Income Tax Act, which would allow recipients to keep the full value without it affecting other income-tested benefits, like the Canada Child Benefit.
Expanding automatic tax filing
According to the government, millions of lower-income Canadians don't file their taxes, which means they miss out on benefits like the GST/HST Credit, the Canada Child Benefit and the Canada Workers Benefit.
Budget 2025 announces a new automatic tax filing system, starting with the 2026 tax year, which would allow filers to review and confirm a pre-filled income tax return. The government says this would allow up to 5.5 million low-income Canadians to file automatically by 2028.
The budget also proposes amending the Income Tax Act to give the CRA the power to file a tax return on behalf of eligible low-income individuals in simple tax situations who don't owe any taxes and don't file themselves.
Bringing back the Canada Strong Pass
The Canada Strong Pass launched this past summer, giving families and young people free or discounted access to national parks, museums, galleries and rail travel across the country. According to the budget, the pass boosted VIA Rail ridership by 6.5%, visits to Parks Canada places increased by 10% and museum visits were up around 15%, on average.
Budget 2025 proposes $116.3 million over two years to renew the Canada Strong Pass for the holiday season (December 12, 2025 to January 15, 2026) and again for summer 2026. Reduced-cost access is already in place for eligible VIA Rail travel over the holidays.
Making the National School Food Program permanent
The government started the National School Food Program in 2024-25 with a limited-time investment of $1 billion over five years. The goal of the program is to feed an additional 400,000 kids each year, on top of those already getting meals through existing programs.
According to the budget, the program is currently saving participating families with two children an average of $800 per year on groceries.
Budget 2025 proposes legislation and $216.6 million per year starting in 2029-30 to make the program permanent, helping provinces, territories and Indigenous partners expand school food programs across the country.
New PSW tax credit
Budget 2025 proposes a temporary Personal Support Workers Tax Credit for eligible PSWs in provinces and territories that haven't signed bilateral wage increase agreements with the federal government. The refundable tax credit would equal 5% of eligible earnings, providing support of up to $1,100 per year.
The measure would be available for the 2026 to 2030 taxation years and is estimated to cost $1.48 billion over six years. B.C., Newfoundland and Labrador, and the Northwest Territories have already signed wage increase agreements and are excluded from this credit.
Axing certain luxury taxes
It's not just the lower and middle classes getting tax cuts and supports from the feds — Budget 2025 announces the government's intention to end the luxury tax on boats and airplanes, effective immediately.
The tax previously applied to the purchase of aircraft over $100,000 and boats over $250,000, and maxed out at 10% of the sale price for these luxury items.
The budget also announces plans to eliminate the Underused Housing Tax as of the 2025 calendar year, citing other efforts like the federal foreign buyer ban and municipal and provincial vacant home taxes. This was an annual tax of 1% of the value of the home and mostly applied to foreign nationals with investment properties that were sitting vacant.
According to the budget, these changes are meant to "provide relief to the aviation and boating industries" and "reduce compliance costs for taxpayers and administrative costs for government."
While most everyday Canadians won't be directly affected by these tax eliminations, they do show where government priorities lie — at a time of massive deficit.
Ending the carbon rebate... including retroactive payments
With the removal of the federal fuel charge — also known as the consumer carbon tax — on April 1, 2025, the April instalment of the quarterly Canada Carbon Rebate was the last one the government sent out. But Canadians who were late to file their tax return were still eligible to get retroactive payments once they filed for any CCR payments they'd missed.
But now, Budget 2025 proposes that no Canada Carbon Rebate payments be made for tax returns or adjustment requests filed after October 30, 2026.
If you still haven't filed your tax return for previous years and were eligible for the rebate, you'll need to file by October 30, 2026, or lose out on those payments for good. Depending on where you lived, those payments could have been worth up to $1,094 per year for one person, and even more for families.
Cancelling home reno tax credit double-dipping
Currently, if you meet the eligibility criteria for both the Home Accessibility Tax Credit and the Medical Expense Tax Credit, you can claim both credits for the same expense for certain eligible purchases, like home renovation costs to improve accessibility if you have a disability.
Budget 2025 proposes to change that starting with the 2026 taxation year.
The proposed amendment would mean an expense claimed under the Medical Expense Tax Credit could not also be claimed under the Home Accessibility Tax Credit.
So, if you have any qualifying expenses planned, you have until the end of this year — December 31, 2025 — to complete those improvements and still claim them under both credits.
Cutting 40,000 federal jobs
Budget 2025 calls for a "Comprehensive Expenditure Review" of the federal public service, with plans to shrink the government workforce by about 40,000 jobs over the next few years — from nearly 368,000 employees in 2023-24 down to around 330,000 by the end of 2028-29. That's a 10% reduction.
According to the budget, the federal public service grew by more than 40% between 2015 and 2024 — double the rate of economic growth.
The government says the cuts are part of a larger effort to save $13 billion per year by 2028-29, adding up to $60 billion in savings over five years. It plans to achieve the reduction mainly through attrition — not replacing employees after they retire or resign — plus using technology like AI to do more with fewer people.
Joining Eurovision??
In perhaps the most bizarre inclusion in a federal budget, the government says it's working with CBC/Radio-Canada to explore participation in Eurovision.
Yes, that Eurovision — the annual international music competition that's been a European institution since 1956. Whether Canada will actually end up competing alongside European nations remains to be seen, but the fact that it's mentioned in a federal budget at all is certainly... something.
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