In this first report of the new year, I wish you all the very best in 2025. Much ink has been spilt in the Ottawa bubble this week regarding the Prime Minister's decision that he will not lead the Liberal Party into the next election, and there are many lingering questions and will inevitably be the subject of future reports. As many Canadians are currently struggling to eat, heat and house themselves, I feel it best to start with information about what we do know will occur in 2025.
 
Unfortunately, the tradition that emerged under Prime Minister Trudeau is that each new year brings federal tax increases across multiple areas. Here is a brief summary of where some Canadians may face higher costs.

Federal payroll tax increases will be the most significant change in 2025. For both employers and employees, the maximum CPP contribution will increase to $4,034 (for workers earning $71,300 or more).

There is also an increase to the second additional CPP contributions (CPP2) that Mr. Trudeau introduced that is applied on income between $71,300 and $81,200. The maximum CPP2 will be increased to $396 in 2025. Keep in mind that CPP2 is over an above CPP contributions.

While the EI payroll tax rate remains unchanged, the increase in maximum insurable earnings threshold means many workers will pay more in 2025. Combined, CPP and EI payroll taxes will cost someone earning $81,200 or more a total of $5,507 in 2025, while employers will pay $5,938 for the same employee. Workers in this income range will see a combined increase of over $400 compared to last year.

While some point out that employees may recover a portion of these contributions after retirement, this offers little comfort to young Canadians who currently struggle to afford rent. Speaking with hospitality and tourism employers, many are struggling to maintain viable operations. These small and medium-sized businesses traditionally provide youth with their first jobs—crucial employment that helps fund their higher education.

Moving on, the Federal Carbon tax will increase from $80 per tonne (in 2024) to $95 per tonne on April 1, 2025. The BC NDP government has indicated it will raise the BC provincial carbon tax to match the federal increase, meaning British Columbians can expect the same carbon tax increase on April 1st. The BC NDP Government has stated plainly that "The reality we face is the federal requirement (Trudeau carbon tax) is still in place. If that changes in the future, we will remove the carbon tax..." Put simply, if the common sense Conservatives win a majority government in the next federal election (as they are the only federal party pledging to eliminate the Trudeau carbon tax), the BC NDP has committed to removing the provincial carbon tax as well.

In 2025, the Trudeau government's excise escalator tax will implement an expected 2% increase on beer, wine, and spirits sold in Canada.
Despite the Trudeau announced capital gains tax program has not yet been passed in Parliament, the Canada Revenue Agency (CRA) has indicated it intends to enforce this tax increase as well.

Additional tax changes for 2025 include new digital services taxes, which major streaming platforms have passed on to their consumers and will inevitably raise the ire of the Americans- whether in Congress or the White House.

This is just a basic summary of federal tax increases coming in 2025. Additional provincial taxes and municipal tax increases are not included in this list.

My question this week: Do you feel you're getting good value for your tax dollars? I'd love to hear your thoughts on why or why not.

I can be reached at [email protected] or call toll-free 1-800-665-8711.