New federal and provincial income tax cuts took effect on July 1, with both levels of government stating that the changes will put more money in the pockets of families.
On June 30, Prime Minister Mark Carney announced that “as of tomorrow, July 1, the government’s middle-class tax cut will be in effect.”
“This tax cut will save a two-income family up to $840 a year and generate tax savings for 22 million Canadians,” the statement said. “By reducing income taxes, Canadians can keep more of their paycheques to spend where it matters most.”
“Canada’s new government has a mandate for change, including cutting taxes for the middle class and bringing down costs,” Carney said.
Finance Minister François-Philippe Champagne said: “Starting tomorrow, Canadians will keep more of their hard-earned money thanks to our middle-class tax cut. At a time when global uncertainty continues to affect household budgets, we’re making life more affordable and supporting the financial security of families across the country. This is about fairness – and about building a stronger economy that works for everyone.”
According to the federal government, the lowest personal income tax rate is being reduced by one percentage point. “To reflect a one-percentage-point cut in the lowest tax rate coming into effect halfway through the year, the full-year tax rate for 2025 will be 14.5 per cent and the full-year rate for 2026 and future tax years will be 14 per cent,” the release stated.
“The Canada Revenue Agency has updated its source deduction tables for the July to December 2025 period so that pay administrators are able to reduce tax withholdings as of July 1.”
In Alberta, the provincial government said “starting July 1, hard-working Albertans will keep more money in their pockets thanks to the new tax cut saving families up to $1,500 per year.”
“The new eight per cent tax bracket was announced as part of Budget 2025 and applies to income up to $60,000 – down from the previous rate of 10 per cent,” the statement said. “Most taxpayers will start to see the benefit of the tax cut with more money on their paycheques starting this month, when payroll withholdings are adjusted.”
“Individual taxpayers will save up to $750 in 2025, while two-income families will see savings of up to $1,500.”
Premier Danielle Smith said: “We know times have been tight, and we’ve been working on ways to ease some of the pressure people are feeling right now. We promised to help with a cut to personal income taxes, and we delivered on that promise in Budget 2025 with a new eight per cent personal income tax bracket. Now Albertans will start to see that reflected in their paycheques as more money can go to the things that individuals and families think are important.”
President of Treasury Board and Minister of Finance Nate Horner said: “Albertans work hard and they deserve to keep more of what they earn. This tax cut delivers real relief now, right when families need it most.”
Minister of Affordability and Utilities Nathan Neudorf added: “Helping Albertans keep more of their hard-earned money will have an immediate impact on affordability in this province. With this step, we are empowering Albertans to make the best financial decisions to meet their needs and support their families.”
The release also quoted Kris Sims, Alberta director of the Canadian Taxpayers Federation: “Hard-working Albertans deserve this tax cut and it’s great to see it happen. Keeping promises really matters and it’s great that hard-working taxpayers will be saving money on their paycheques in Alberta.”
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