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Ottawa — Millions of Canadians are set to see more take-home pay starting July 1 as the federal government’s promised middle-class tax cut comes into effect.
Prime Minister Mark Carney confirmed Sunday that the new tax measure will save a two-income household up to $840 a year and provide relief to 22 million Canadians. The change reflects a campaign pledge to ease cost-of-living pressures.
“Canada’s new government has a mandate for change, including cutting taxes for the middle class and bringing down costs,” Carney said in a statement. “With our middle-class tax cut in effect tomorrow, families will save up to $840 and keep more of what they earn.”
The measure reduces the lowest personal income tax rate from 15 per cent to 14 per cent, phased in over the next two tax years. The rate will sit at 14.5 per cent for 2025 and reach 14 per cent in 2026. The Canada Revenue Agency has already updated payroll deduction tables to reflect the change for the remainder of 2025.
The Finance Department says the cut will mostly benefit Canadians earning less than $114,750, with nearly half of the savings going to those earning under $57,375.
Carney said the tax relief is part of a broader plan to lower costs, improve affordability and strengthen Canada’s economy.
“Starting tomorrow, Canadians will keep more of their hard-earned money thanks to our middle-class tax cut,” Carney said. “This is about fairness and about building a stronger economy that works for everyone.”
The government says it remains focused on making life more affordable, supporting safe communities and reinforcing Canada’s position as the strongest economy in the G7.
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