A new year brings new rules. Here are some new federal and provincial laws that come into effect in 2025.Sean Kilpatrick/The Canadian Press
A new year often brings new federal regulations and rules. In 2025, there will be a slew of new laws that come into effect – some as early as Jan. 1 – including new mortgage rules, increases to hourly minimum wage and updated limits on tax-free savings account contributions.
Here are highlights of the new federal and provincial laws coming this year, and how they will affect you.
New CRA tax rules
Tax brackets indexed for inflation
Every year, most income tax and benefit amounts are indexed to inflation. The Canada Revenue Agency (CRA) said that the inflation rate used to index the 2025 tax brackets and amounts will be 2.7 per cent. Last year, that number was 4.7 per cent because inflation was much higher.
All five federal income tax brackets have been adjusted for 2025 to keep up with inflation. These new thresholds will provide Canadians whose wages lag inflation with a personal income tax break. The new brackets are:
- 15 per cent below $57,375 of income
- 20.5 per cent between $57,375 to $114,750 of income
- 26 per cent between $114,750 to $177,882 of income
- 29 per cent between $177,882 to $253,414 of income
- Anything above that is taxed at 33 per cent
TFSA contribution limit
The CRA has revealed that the annual contribution limit for tax-free savings accounts (TFSA) for 2025 is $7,000. The limit is unchanged from 2024, when it was increased by $500 to compensate for higher inflation. That means Canadians who have never contributed to a TFSA and were born in 1991 or earlier would have a cumulative TFSA contribution limit of $102,000 as of Jan. 1, 2025.
The TFSA program, which allows investors to avoid being taxed on capital gains and withdrawals, always increases with inflation. Its original cap when the program was introduced in 2009 was $5,000.
RRSP contribution limit
The CRA imposes an annual limit on how much Canadians can deposit into their registered retirement savings plan account. The limit in 2025 remains at 18 per cent of the previous year’s income, but the maximum contribution is now $32,490 – up from $31,560 in 2024.
Canada Pension Plan contributions
Canada Pension Plan contributions are rising as part of a six-year plan to enhance contributions and benefits. The CPP contribution rate for 2024 will remain at 5.95 per cent, but the estimated maximum contribution is $4,034.10 – up from $3,867 in 2024. The self-employed CPP contribution rate remains at 11.9 per cent, and the maximum contribution will increase to $8,068.20.
Last year, the federal government also announced a second CPP tax that will only affect workers whose income is above a first earnings ceiling, which is $71,300 in 2025. The second earnings ceiling is 14 per cent higher at $81,200. The CPP2 contribution applies to pensionable earnings between these amounts, with a maximum employee/employer contribution of $396 each. The 2024 self-employed CPP2 contribution rate will be 8 per cent, and the maximum self-employed contribution will be $792.
Employment Insurance premiums
The 2025 Employment Insurance (EI) premium rate for employees is $1.64 (per $100 of insurable earnings), with a maximum annual contribution of $1,077.48. That is a two-cent decrease from the 2024 rate. Meanwhile, the EI premium rate for employers is $2.30, with a maximum annual contribution of $1,508.47
In Quebec, the 2025 EI premium rate for employees is $1.31 (per $100 of insurable earnings), with a maximum annual contribution of $860.67. The 2025 EI premium rate for Quebec employers is $1.83, with a maximum annual contribution of $1,204.94.
Minimum wage increases in provinces
Canada’s federal minimum wage, which applies to those working in federally regulated industries, will see its next adjustment in April, 2025, increasing to $17.70 from $17.30 per hour on April 1.
The minimum hourly wage in some provinces will also increase in 2025:
- Ontario plans to increase its minimum wage on Oct. 1, continuing its annual practice of adjusting the wage around this time each year. The minimum wage in Ontario is currently $17.20 per hour.
- British Columbia is also expected to raise its minimum wage on June 1. The minimum wage in B.C. is currently $17.40 per hour.
- Yukon, Nova Scotia and New Brunswick are all set to increase their minimum wages on April 1. The minimum wage in Yukon is currently $17.59 per hour; $15.20 per hour in Nova Scotia; and $15.30 per hour in New Brunswick.
Canadian Dental Care Plan opens to all eligible Canadians
The Canadian Dental Care Plan will open to all remaining eligible Canadians in 2025.Richard Buchan/The Canadian Press
The Canadian Dental Care Plan, a federal program that covers dental care costs for Canadians without insurance, started rolling out in 2024 for seniors and people under 18.
The program will open to all remaining eligible Canadians in 2025.
Eligibility requirements include a net family income under $90,000, being a Canadian resident for tax purposes and having filed a tax return in the previous year. Between 40 per cent and 100 per cent of eligible costs will be covered, depending on income.
Eligibility for Canada Child Benefit extends to grieving families
Starting in January, 2025, eligibility for the Canada Child Benefit (CCB) will be extended to pay families up to six months after a child’s death. Previously, a CCB recipient would stop receiving the benefit the month after a child dies.
The tax-free monthly payment is made to eligible families to help with the cost of raising children under 18 years of age.
Trudeau unveils two-month GST holiday tax break for Canadians
A sign advertising no GST 5% sales tax on certain products is shown at a convenience store in Montreal, on Dec. 14, 2024.Graham Hughes/The Canadian Press
Prime Minister Justin Trudeau announced in November that he would introduce legislation to provide a two-month tax break on the GST and, in applicable provinces, HST, to alleviate pocketbook pressures for Canadian households. A majority of MPs in the House of Commons passed the legislation on Nov. 28.
The tax break began Dec. 14 and will continue until Feb. 15 and is expected to cost $1.6-billion. Items eligible for the tax relief include Christmas trees, kids’ diapers, clothing and toys, junk food, beer, wine, and store-bought, catered and restaurant meals. Here’s a full list of everything that is and isn’t included in the GST break.
In provinces where the sales tax is harmonized, the full tax will be lifted, whereas those that collect federal and provincial sales tax separately will only have Ottawa’s portion removed.
Ottawa works towards implementation plan for Pharmacare Act
Prescription drugs are seen on shelves at a pharmacy in Montreal on March 11, 2021.Ryan Remiorz/The Canadian Press
Last year, the Senate passed pharmacare legislation that will see Ottawa work to set up agreements with provinces and territories for the coverage of some diabetes medications and contraceptives.
The Pharmacare Act, known as Bill C-64, received Royal Assent on Oct. 10, 2024, and includes universal access to those medications.
By Oct. 10, 2025, or a year after the bill became law, a committee of experts must submit its recommendations on the operation and financing of national, universal, single-payer pharmacare in Canada to the health minister.
The Act also requires Canada’s Drug Agency to develop a list of essential medication and related products to inform the development of a national formulary, a national bulk purchasing strategy to help further reduce drug prices and a pan-Canadian strategy on the appropriate use of prescription medications – no later than Oct. 10, 2025.
An increase to the capital gains inclusion rate
Chrystia Freeland speaks at a news conference about changes to capital gains tax legislation, in Ottawa, on June 10, 2024.Patrick Doyle/Reuters
In its 2024 federal budget, Ottawa announced it would increase the share of capital gains that would be subject to income tax. The inclusion rate – the portion on which tax is paid – will rise from one-half to two-thirds on capital gains realized by companies. The increase will also apply to individuals, but only on capital gains above $250,000. All profits above $250,000 will face a 66.7-per-cent inclusion rate.
Those changes, however, aren’t law yet. The federal government said the capital-gains tax hike would take effect on June 25, 2024, but political turmoil in Parliament has prevented it from passing the legislation. The CRA has issued guidance advising Canadians to file their taxes based on the proposed tax changes even though the changes aren’t law yet.
New rules for down payments and mortgages
New mortgage rules will require buyers to put down a minimum of 5 per cent on the first $500,000 of the purchase price and 10 per cent on the portion between $500,000 and $1.5-million.Carlos Osorio/Reuters
Ottawa’s new mortgage rules, announced last September, are aimed at making buying a home more attainable for young Canadians and making it easier for Canadians to get mortgage insurance for pricier homes.
The new rules, which took effect on Dec. 15, will require buyers to put down a minimum of 5 per cent on the first $500,000 of the purchase price and 10 per cent on the portion between $500,000 and $1.5-million. So on a home that costs $1-million, the minimum down payment will be $75,000, down from $200,000 under the current rules. On a $1.5-million home, it will be $125,000.
Insured mortgages will also be allowed on homes of up to $1.5-million, up from a $1-million cap previously.
First-time homebuyers will also be allowed to take out an insured mortgage with a 30-year amortization for all types of homes – up from the previous cap of 25 years. And more buyers will be allowed to take out an insured mortgage with a 30-year amortization on a preconstruction home. Not all investors are eligible.
Ottawa pledges more cheap loans for homeowners to create rental suites
The federal government is providing two low-cost financing options for homeowners to add a rental unit such as a basement apartment or a laneway house to their property.
Homeowners will be eligible for a low-cost loan of up to $80,000 under the Canada Secondary Suite Loan Program, which the federal government hopes will help create more rental housing. The program is expected to launch in early January and the loans will have 15-year terms with an interest rate of 2 per cent.
In addition to the new loan program, homeowners will soon be able to refinance their insured mortgages if they use the equity to cover the cost of adding a secondary suite. Borrowers must pay for mortgage insurance if they have made a down payment that is less than 20 per cent of the property’s purchase price. The ability to refinance begins Jan. 15.
Ottawa announces updated immigration levels
Immigration, Refugees and Citizenship Minister Marc Miller speaks in the House of Commons, in Ottawa, on Dec 2, 2024.Adrian Wyld/The Canadian Press
Prime Minister Justin Trudeau and Immigration Minister Marc Miller unveiled plans in October to reduce permanent resident numbers from 500,000 to 395,000 in 2025 and from 500,000 to 380,000 in 2026. They set a target of 365,000 permanent residents in 2027.
The reduction marks a policy U-turn for the government, and is the first time that Ottawa has shrunk targets for permanent residents. It froze immigration levels in 2023 in an attempt to tackle rising numbers.
The government also released a plan to address the rise in the number of temporary residents, including international students and people here on work permits, publishing annual targets for the first time. It plans to admit 673,650 temporary residents in 2025, dropping to 516,600 in 2026 and 543,600 in 2027. It calculated that, with the changes, Canada’s temporary resident population will decline by 445,901 in 2025 and 445,662 in 2026.
Province-specific regulations
British Columbia
B.C. introduces anti-home-flipping tax
Starting Jan. 1, British Columbia will introduce a maximum 20-per-cent home-flipping tax that applies to the profit people earn from selling a property within two years of purchase.
The previously announced tax is aimed at discouraging investors “from buying housing to turn a quick profit,” the province says. Exemptions to the new tax include cases involving divorce, job loss or other changes in household membership.
The province has estimated that about 4,000 properties will be subject to the tax in 2025, with the revenue going toward “strengthening housing programs and building new affordable homes” in B.C.
B.C. sets rent increase cap at 3 per cent for 2025
The maximum allowable rent increase in British Columbia next year will be 3 per cent, down from 3.5 per cent in 2024.
The provincial government says that the new amount, which takes effect on Jan. 1, is tied to inflation and comes after increases were kept “well below inflation” in 2023 and 2024.
The B.C. Housing Ministry says landlords who increase rent must provide three months of notice to tenants using an official form, and rent can’t be raised more than once in 12 months.
Ontario
Caps on child-care fees coming for Ontario families
The government is capping child-care fees at $22 per day for families with children in centres that are enrolled in the national $10-a-day program.
The fees have already come down about 50 per cent to an average of $23 a day. Next year, they will fall to an average of $19, and capped at $22 – a 59 per cent reduction compared to 2020 rates.
Those rates will be cut further to an average of $10 a day by March, 2026, a date pushed back from an earlier pledge of September, 2025.
Officials have said the new funding formula, first announced in August, will ensure no child care operators in the $10-a-day program will experience a loss. Starting in the new year, operators will get a main pool of funding based on several factors such as how many spaces they operate, how many children they serve in each age group and the region in which they’re located.
Changes to Ontario Immigration Act
Changes to the Ontario Immigration Act will “crack down” on fraudulent immigration representatives that exploit newcomers, the province says. The changes include new standards for these representatives such as providing proof of registration or licence and having a written contract with applicants.
The changes also impose tougher penalties on those who violate these standards, including bigger fines and multiyear or lifetime bans for those convicted of serious offences.
With reports from Rachelle Younglai, Erica Alini, Salmaan Farooqui, Marieke Walsh, Laura Stone, Stephanie Levitz, Barry Choi and The Canadian Press.