WP looks at some of the key measures announced in the budget
The Canadian federal budget for 2025, titled Canada Strong, introduces several measures designed to tackle affordability pressures, stabilize the housing market, and restructure the tax code.
For financial advisors guiding clients through volatile economic times, the most significant changes lie in personal income tax adjustments, targeted housing relief, and enhancements to consumer financial protection.
“Growth is nowhere near where it could be due to trade frictions, but the fiscal reality is tight,” says CPA Canada chief economist David-Alexandre Brassard. “The government has focused on spurring long-term productivity through targeted investments and tax measures, while phasing out several existing credits, which will help to simplify Canada’s tax system.”
Teresa Palandra, President of Mercer Canada said that the budget, as proposed, should be a positive driver for growth as we move into 2026.
“The Prime Minister’s commitment to increasing capital spending is particularly encouraging - not only should this boost short-term growth, but it should also enhance productivity, thereby strengthening Canada’s long-term economic prospects,” she says.
But the body representing small and medium sized Canadian businesses, is not impressed.
“[The budget] was a missed opportunity to provide meaningful tax relief to Canada’s employers,” says Dan Kelly, president of the Canadian Federation of Independent Business (CFIB). “The government could have taken the reins by reducing the small business corporate tax rate, freeing up millions of dollars for investment in employees, technology and operations.”
Direct income and affordability measures
The government is prioritizing immediate relief for middle and low-income Canadians while making substantial structural changes to the economy.
- Middle-Class Tax and Rebate Adjustments:
Effective July 1, 2025, the lowest marginal federal personal income tax rate will be reduced from 15% to 14%. This measure is positioned as relief for middle-class Canadians, saving a two-income family up to $840 annually. To prevent unintended consequences for taxpayers claiming large non-refundable credits, a temporary non-refundable Top-Up Tax Credit has been introduced (for 2025-2030) to preserve the value of credits exceeding the first tax bracket threshold.
Separately, the divisive consumer carbon price has been cancelled (effective April 1, 2025), a move estimated to reduce gasoline prices by approximately $0.18 per litre in most provinces.
- Support for Vulnerable Filers:
The budget initiates the Automatic Federal Benefits program starting with the 2026 tax year, granting the Canada Revenue Agency the authority to automatically file returns for up to $5.5$ million low-income Canadians.
This change ensures that eligible individuals receive vital federal benefits like the GST/HST Credit and the Canada Child Benefit, significantly impacting the cash flow and poverty risk profiles of lower-income households. Additionally, a temporary Personal Support Workers Tax Credit (5 per cent of eligible earnings, up to $1,100/year) is available from 2026 to 2030 for qualifying front-line workers.
“There’s not a lot to unpack on the tax front in this long-awaited budget,” says John Oakey, CPA Canada’s vice-president of tax.
“The government focused on economic productivity by expanding the SR&ED and critical minerals tax credits and committing to accelerated capital deductions but left behind many promises outlined in their election platform.”
Real estate, housing supply, and wealth
Housing supply and affordability are addressed through targeted tax relief and major infrastructure initiatives.
- Immediate Tax Relief for Home Buyers:
The most direct relief is the elimination of the Goods and Services Tax (GST) for first-time home buyers acquiring new homes valued at or under $1 million, with a reduced GST rate applying to homes between $1 million and $1.5 million. This policy reduces the cost of ownership, making an immediate impact on client budgets and purchasing power. Furthermore, the Underused Housing Tax (UHT) will be eliminated entirely beginning with the 2025 calendar year, simplifying compliance for property owners.
- Boosting Supply and Liquidity:
To increase the housing supply, the federal government is launching Build Canada Homes (BCH), a new federal agency backed by an initial $13 billion cash investment. BCH is mandated to finance and build non-market, affordable housing at scale, leveraging modern construction methods with the aim of nearly doubling the current pace of home construction. The annual issuance limit for Canada Mortgage Bonds (CMBs) will also increase from $60 billion to $80 billion starting in 2026, exclusively targeting financing for multi-unit rental housing.
- Immigration and Demand Management:
In a significant shift, the 2026-2028 Immigration Levels Plan sets the goal of reducing the total number of temporary residents to less than 5 per cent of the Canadian population by the end of 2027 (down from a peak of 7.5 per cent in 2024). This explicitly aims to ease pressure on social services and housing demand, an important external factor for real estate valuation models.
Financial security and investment environment
The budget includes measures to strengthen consumer confidence and refine the investment landscape.
- Protecting Client Assets and Financial Stability:
The creation of a new Financial Crimes Agency signals a focused effort to combat sophisticated financial crimes, including money laundering and online fraud. This is complemented by a pledge to review bank fees (e.g., Interac e-Transfer and ATM fees) and propose legislative amendments to the Bank Act to combat consumer-targeted fraud. Additionally, rules governing deposited cheques will be modernized, increasing the amount of immediately accessible funds from $100 to $150.
- Registered Investment Planning:
For wealth and estate planning purposes, the government intends to simplify and streamline the qualified investment (QI) rules for registered plans (RRSPs, RRIFs, TFSAs, etc.) starting in 2027. This includes repealing certain complex small business investment rules and replacing the current "registered investment" regime with new QI categories tied to registered investment fund managers. Furthermore, an expense claimed under the Medical Expense Tax Credit is now explicitly precluded from also being claimed under the Home Accessibility Tax Credit (effective 2026).
- Business Investment Incentives:
The budget highlights a significant new package of corporate tax measures, the Productivity Super-Deduction, designed to stimulate business investment and long-term growth.
This package includes temporary 100% immediate expensing for eligible manufacturing and processing buildings (until 2030) and accelerates Capital Cost Allowances (CCAs) for low-carbon liquefied natural gas facilities. Additionally, the full credit rates for the highly significant Carbon Capture, Utilization, and Storage (CCUS) Investment Tax Credit will be extended by five years, applying through 2035, signaling long-term certainty for clean energy projects.
“In addition to the lack of tax relief and giant fiscal deficits, many of the measures meant to stimulate the economy or insulate Canadians from the impact of tariffs appear to exclude small firms,” the CFIB’s Dan Kelly says. “There were a few wins for small business owners in today’s budget, albeit many were reannouncements from 2024.”
Read the government’s Budget 2025 document.
