The government adjusts tax brackets and savings limits each year, so this is a good time to review how the changes may affect your personal tax planning.
The CRA is introducing new tools, including SimpleFile and future auto file features, to help people with straightforward tax situations file more easily.
Programs such as TFSAs, RRSPs, RESPs, and home buying plans remain important. Staying informed about rule changes can help you make the most of these benefits.
Tax filing season is upon us: the deadline for filing is Thursday, April 30, 2026. For business owners and their spouses, the tax return due date is Monday June 15, 2026. Any income taxes owing for the 2025 taxation year for both individuals and businesses are due Thursday April 30, 2026.
The inflation index factor for 2026 came in at 2.0%, down from 2.7% for the previous year. Below are the 2025 and 2026 federal income tax brackets. Note that this year’s federal Budget, expected in the fall, could change things for 2026.
Taxable income level |
Tax bracket |
|---|---|
$0 to $57,375 |
14.50% (14% effective July 1, 2025, 14.50% annualised) |
>$57,375 to $114,750 |
20.50% |
>$114,750 to $177,882 |
26% |
>$177,882 to $253,414 |
29%* |
>$253,414 |
33% |
Taxable income level |
Tax bracket |
|---|---|
$0 to $58,523 |
14% |
>$58,523 to $117,045 |
20.50% |
>$117,045 to $181,440 |
26% |
>$181,440 to $258,482 |
29%* |
>$258,482 |
33% |
* For 2025, the basic personal amount claim is reduced from $16,129 to $14,538, and for 2026 it is reduced from $16,452 to $14,829 for individuals whose net income is greater than the amount at which the 29 percent tax bracket begins. The additional tax from the reduction results in a nominal increase in the total taxes payable. Due to the phase out of the basic personal exemption, the tax rate at this tier is 29.31% and 29.29% for 2025 and 2026, respectively.
A new free filing service is being introduced by the Canada Revenue Agency (CRA) called SimpleFile where eligible individuals with a lower income and simple tax situation can file their returns. SimpleFile allows individuals to file their returns in one of three ways, digitally (online), phone or by paper. The service opened on March 9, 2026. The phone and paper filing methods are only permitted where the CRA has sent the individual an invitation whereas the SimpleFile digital method can be used without an invitation. Eligibility conditions for the SimpleFIle digital option can be found off the CRA website by reviewing the determination questions. For more information, please review the CRAs SimpleFile website.
Separately, there is a pilot project that will permit the CRA to file a tax return on behalf of eligible individuals who do not owe tax unless they opt out of this service. This service is expected to be piloted in the fall of 2026. Additionally, eligible individuals will be able to review and approve pre-filled tax returns on the CRA account as early as March of 2027.
There are a myriad of credits and deductions available to both individuals and businesses, each with its unique conditions for qualification and purpose. We have highlighted the top-up tax credit below, though we encourage a review of the available credits and deductions to determine eligibility.
Top-up tax credit: Introduced as a measure to ensure low-income individuals that are affected by the reduction in the effective tax rate at the first tax tier. The top-up credit effectively maintains the 15% rate for certain non-refundable tax credits on amounts over the first income tax bracket threshold of $57,375 for 2025. It is expected that taxpayers with large non-refundable tax credit claims will qualify for this credit.
With the 2024 capital gains rate changes announced in Budget 2024 clearly in the rear-view, the 2025 inclusion rate remains steady at the familiar fifty per cent (50%). As future Budget announcements have moved from spring to the fall of each year, we wait to see if there will be any new developments to the capital gains inclusion rates for 2026 and beyond, though based on the backlash during the last proposed inclusion change, we are expecting rates to stay the same.
The TFSA contribution limit remains at $7,000 for 2026. The total cumulative annual TFSA contribution room allocated since 2009 is $109,000.
| 2009 to 2012 | $5,000 |
| 2013 and 2014 | $5,500 |
| 2015 | $10,000 |
| 2016 to 2018 | $5,500 |
| 2019 to 2022 | $6,000 |
| 2023 | $6,500 |
| 2024 to 2026 | $7,000 |
From 2022 to 2024, the limit had increased by $500 for 2 consecutive years on account of inflation alone, from $6,000 to $7,000. Given the lower inflation rate in 2026 (2.0%), the TFSA contribution limit remained the same. Our internal calculations indicate that it would require an annual inflation rate of approximately 0.9110% (1% rounded) to increase the TFSA allotted amount to $7,500 for 2027; something likely to occur.
The RRSP dollar limit is set at $33,810 for 2026. As a refresher, an individual’s 2026 RRSP contribution room is the lesser of 18% of their prior year’s earned income and the RRSP dollar limit plus any carryforward unused contribution room plus/minus any pension adjustments (if applicable). The RRSP deduction room for 2026 can be found on the 2025 Notice of Assessment or online by logging into the “CRA My Account” portal.
Finally, the 2025 first 60-day RRSP contribution deadline was Tuesday, March 3, 2026. These are contributions that can be made in the first 60 days of the year that are eligible for deduction against income taxable in the previous taxation year.
The 2026 annual educational assistance payment (EAP) threshold is $29,459. If the total amount of EAPs requested in the year exceeds this limit, the RESP promotor (i.e., the financial institution that administers the RESP) may ask for additional information to support the reasonableness of the amount requested. EAPs, as a refresher, are withdrawals consisting of government grants and investment growth from an RESP.
Though not new, this is a good opportunity to remind readers that effective March 28, 2023, there were increases to the EAP limits for full-time and part-time students during the 13-week period, as shown below:
| Pre-budget (before March 28th, 2023) | Post-budget (on or after March 28th, 2023) | |
|---|---|---|
| Full time | $5,000 | $8,000 |
| Part time | $2,500 | $4,000 |
Introduced in 2023, the FHSA has gained traction amongst Canadians with an estimated ~739,000 accounts established, holding an approximate value of $2.79 billion in assets1. Individuals looking to find their FHSA participation room must fill out Schedule 15 – FHSA Contributions, Transfers and Activities along with their income tax return for the year the FHSA is first established. This form is required even if no contributions are made into the plan.
HBP withdrawals made after April 16, 2024, qualify for an increased limit of $60,000. The previous limit was $35,000. Additionally, individuals who make a first HBP withdrawal between January 1, 2022 and December 31, 2025 are eligible for temporary repayment relief, which defers the start of the 15-year repayment period by an additional three years (i.e., rather than the default repayment schedule, which begins in the 2nd year following the year of the first HBP withdrawal, repayments will instead start in the 5th year following the year of the first withdrawal).
Recent modernization efforts now permit for the digital submission of evidence for registration and onboarding for the My Service Canada Account portal. This portal is a one-stop site for information on and management of a range of government programs including CPP, OAS, EI and student financial assistance, to name a few. For those who have yet to register for the portal, it is relatively straightforward, even for those less technically inclined.
As of January 2026, the maximum CPP pension retirement benefit is $1,507.65 per month or $18,091.80 annually. The average CPP pension retirement benefit is $803.76/month or $9,645.12 annually.
The OAS repayment threshold is $95,323 for 2026. For every dollar above this threshold, OAS benefits will be reduced by 15% until they are fully eliminated. Note that due to previous changes announced in 2022, OAS benefits for individuals 75 years of age and older are increased by 10%.
|
|
|
Aged 65 to 74 |
Aged 75 + |
OAS clawback period |
Income year |
OAS clawback begins |
OAS eliminated |
OAS eliminated |
July 2024 to June 2025 |
2023 |
$86,912 |
$142,609 |
$148,179 |
July 2025 to June 2026 |
2024 |
$90,997 |
$148,451 |
$154,196 |
July 2026 to June 2027 |
2025 |
$93,454 |
$151,668 |
$157,490 |
July 2027 to June 2028 |
2026 |
$95,323 |
$154,708 |
$160,647 |
As of January 2026, the maximum monthly OAS retirement pension is $742.31 or $8,907.72 annually for seniors aged 65 to 74 and $816.54/monthly ($9,798.47 annually) for seniors aged 75 and over.
The prescribed rate as of January 1, 2026, is 3% and will continue to be the rate for Q2 2026, spanning from April to June 2026. The prescribed rates are indexed to the Government of Canada's three-month T-bill yield. The prescribed rate impacts the ability to split income with a lower income-earning spouse or common-law partner. To recap, a spousal loan permits a higher income earning spouse to transfer wealth to the lower-income spouse for investment use. Investment income earned will not be subject to the spousal attribution rules provided the loan carries an annual interest rate at least equal to the prescribed rate of interest at the time the loan was made and that the interest is paid by January 30 of the following year. The interest income payments are included as income by the spouse who made the loan, and the payment of interest is deductible from income by the spouse who received the loan, provided the loan is put to an eligible use.
Below is a snapshot of the spousal-prescribed rate loan rates over the last few years.
Period |
2021 | 2022 |
2023 |
2024 |
2025 |
2026 |
Q1 January - March |
1% |
1% |
4% |
6% |
4% |
3% |
Q2 April - June |
1% |
1% |
5% |
6% |
4% |
3% |
Q3 July - September |
1% |
2% |
5% |
5% |
3% |
? |
Q4 October - December |
1% |
3% |
5% |
5% |
3% |
? |
In August 2024, the Department of Finance proposed various amendments to the enhanced trust reporting rules that were first introduced for trusts with a taxation year ending on or after December 31, 2023. The amendments essentially reduce the scope of filing requirements and the number of trusts captured. The amendments narrow the definition of bare trusts and provide exceptions to filing requirements for small trusts, among other things. In some situations, certain joint account arrangements and informal trust (ITF) arrangements may be subject to the new rules.
The enhanced trust reporting rules require trusts to obtain beneficial ownership information on an annual basis to be reported on the new tax schedule, T3SCH15, Beneficial Ownership Information on Trust. The filing deadline for the 2025 taxation year is March 31, 2026. Note that the CRA does not expect bare trusts to file a T3 return, including the enhanced beneficiary information, for taxation years ending in 2025. Certain bare trusts will be required to file a return and the enhanced beneficiary information starting in taxation years ending in 2026 and subsequent years.
For more information on how these rules may impact ITF accounts, please refer to our article, New trust reporting rules and implications for in-trust-for (ITF) accounts. Inquiries on these changes can be obtained by contacting Invesco’s Tax & Estate InfoService through our Client Relations department.
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