What does Canada’s 2025 federal budget mean for your money?

GST/HST rebate for first-time home buyers

Hoping to buy a new home? Budget 2025 includes the previously announced elimination of the 5% Goods and Services Tax (GST) for first-time buyers on newly built homes priced up to $1 million, and reduced GST for first-time buyers on new homes priced between $1 million and $1.5 million. These changes, which are currently before Parliament as part of Bill C-4, aim to improve housing affordability and encourage construction. If they're approved, eligible first-time buyers could receive a GST/HST rebate of up to $50,000, on top of the existing GST/HST new housing rebate.

Also worth noting: in September, the government launched Build Canada Homes, a new federal agency tasked with building and financing more affordable homes for Canada's middle class.

A temporary top-up credit for the middle-class tax cut

In May, the Prime Minister announced that Canada's first marginal personal income tax rate would drop from 15% to 14.5% for the 2025 taxation year, and then to 14% for 2026 and every year after that. The so-called “middle-class tax cut” is said to benefit nearly 22 million Canadians by offering tax relief of up to $420 per person, saving two-income families up to $840 a year. (This measure is part of Bill C-4, currently before Parliament.)

Every little bit helps, but the cut had an unintended side effect: the first marginal tax rate is also applied to most non-refundable tax credits. Taxpayers whose non-refundable tax credits exceed the first income tax bracket threshold—which in 2025 is $57,375—might lose more in the value of these credits than they save from the tax cut. (Whoops!) To ensure no one ends up paying more after the middle-class tax cut, the budget includes a temporary “top-up tax credit” that will maintain the 15% rate for non-refundable tax credits claimed on amounts above the first income tax bracket threshold. It would apply for the 2025 to 2030 tax years.

Lowering the tax burden for personal support workers

With an aging population, few would dispute the growing role that personal support workers will be asked to take on. To put more money in the pockets of PSWs, the federal government is proposing to offer these workers a refundable tax credit equal to 5% of their eligible earnings, up to $1,100 per year. If passed, this measure will be available for the 2026 to 2030 taxation years.

Note: PSWs in B.C., Newfoundland and Labrador, and the Northwest Territories would not be eligible for this credit due to bilateral agreements to provide funding over the next five years to increase the wages of PSWs. This tax credit measure would be available for the 2026 to 2030 taxation years.

New consumer protections to know about

Budget 2025 includes some new consumer protections related to banking and fraud prevention:

• Faster access to cheque funds: Currently, when you deposit a cheque, you can access just the first $100 immediately. Under the new budget, this amount will increase to $150.
• Equal treatment for cheque deposits: People depositing cheques in person with a teller or other bank employee can currently access the first $100 right away, but those depositing via ATM or mobile app must wait one business day. The new budget will make access immediate no matter how you deposit your cheque.
• New rules for bank-branch closures: The government wants banks to give the public more notice when closing a branch. It also intends to outlaw account switching or closure fees for 12 months after the branch closes.
• More onus on banks to fight fraud: The government plans to launch a national anti-fraud strategy, and to amend Canada's Bank Act to require banks to have policies and procedures to detect and prevent consumer-targeted fraud. This could mean, for example, that you'll be able to set maximum transaction limits and turn off account features you don't need.

A one-time supplemental payment for the Canada Disability Benefit

The Canada Disability Benefit (CDB), a federal benefit launched this past summer, puts up to $2,400 into the pockets of working-aged Canadians with disabilities. To qualify for the CDB, though, Canadians must first be certified for the Disability Tax Credit (DTC). Applying for the credit is free, but physicians often charge a fee to complete the form.

The new budget proposes a one-time $150 supplemental CDB payment to help offset the costs of DTC certification or re-certification. The payment would be retroactive to the CDB's launch date and go out to recipients before the end of 2026–2027. The government also plans to introduce legislation to exempt CDB payments from being treated as income under the Income Tax Act, which will help recipients keep the full value of their other government benefits.

A change to claiming home accessibility and medical expense credits

In Canada, taxpayers who undertake home renovations or alterations to improve accessibility can claim two tax credits: the Home Accessibility Tax Credit, which applies at the lowest personal income tax rate on up to $20,000 of expenses each calendar year, and the Medical Expense Tax Credit, a non-refundable credit that applies at the lowest personal income tax rate on the amount of qualifying medical and disability-related expenses in excess of the lesser of $2,834 (for 2025) or 3% of the claimant's net income. Budget 2025 proposes changes to prevent taxpayers from claiming both for the same expense—essentially double-dipping—starting with the 2026 tax year.

Keep in mind, the budget is a roadmap, not finalpolicy decisions. Many of the provisions included in the 493-page document may change before they get implemented, some of which aren't scheduled to come into effect until 2027.

Check back often for more Canadian tax news. TurboTax stays on top of policy changes, so that when you sit down to do your taxes, we're a step ahead and getting you every dollar you deserve. TurboTax Online makes tax filing quick and easy, and we'll help you find all the credits and deductions you're eligible for.

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