15 points to take away from the 2025 federal budget

3. There’s spending… and then there’s spending
   The federal budget makes a distinction between operational spending and capital spending, the latter being used for what the minister refers to as “generational investments.” Out of the year’s estimated $78.3 billion deficit, operational spending accounts for about $33 billion, while capital spending represents some $45 billion. The government plans to completely eliminate the portion of the deficit created by operational spending by fiscal 2028-2029.

4. The main sources of spending  
   The government frames its deficit projections for the next five years in terms of four main categories of “generational” investments: infrastructure ($115 billion), productivity and competitiveness ($110 billion), defence and security ($30 billion), and housing ($25 billion).  

5. A new “productivity super-deduction” 
   Business owners, this announcement is for you: to stimulate productivity and investment, the government is proposing to create a “productivity super-deduction.” This is a set of enhanced tax incentives covering all new capital investment. It will allow businesses to write off a larger share of their new investments right away, which, according to the government, will boost investment and expansion.

6. Reducing plan for the public service  
   If you work in the public service, be aware that the government is planning to reduce expenses by $13 billion a year between now and 2028-2029. This goal is to be achieved partly by trimming the workforce from 368,000 in 2023-2024 to 330,000 by the end of fiscal 2028-2029, for a reduction of about 40,000 positions, or 10% of the total. The government has specified that it wants to reach this goal mainly through attrition from retirement and voluntary departures. In the same vein, the government proposes to rein in the annual growth of direct program spending to less than 1% in 2025-2026; it currently stands at 8%.

7. Elimination of an “inefficient” tax  
   Do you work in the aviation or boating industries? Note that the government has announced its intention to eliminate the luxury tax on aircraft and watercraft as of the day after Budget Day. This tax, ranging from 10% to 20%, was considered to be detrimental to business, in particular by Canadian companies operating in the private aircraft industry.

8. Reduction in the first marginal tax rate
   When it comes to announcements more directly related to personal finance for individuals, let’s start with a measure announced earlier this year, currently before Parliament as part of Bill C-4 – and now confirmed in the 2025 budget. In fact, on July 1, 2025, the marginal tax rate on the lowest range of personal income was reduced from 15% to 14%. According to the government, this will result in tax savings of up to $420 per person and $840 per couple. This tax relief will mainly benefit individuals with income in the two lowest tax brackets.

9. Less GST for first-time new home buyers
   The budget also confirms another measure announced earlier this year: to promote housing affordability, the government is eliminating the goods and services tax (GST) for first-time buyers of new homes worth up to a million dollars and reducing the GST for first-time buyers of new homes costing from $1 million to $1.5 million.

10. More flexibility in banking operations
    The budget includes a series of measures aimed at simplifying certain banking operations carried out by banks and other federally regulated financial institutions, notably the process of switching accounts from one institution to another.

11. Extending Employment Insurance benefits during bereavement
    One measure in particular will affect bereaved parents after the death of a child: the budget proposes an amendment that would allow claimants receiving parental benefits under the Employment Insurance program to obtain an additional eight weeks of benefits in the event of the death of their child.

12. New tax credit for personal support workers  
    The budget contains a proposal for a new temporary refundable tax credit for personal support workers who meet certain criteria. This credit will provide qualifying individuals who work for health care establishments with a refundable tax credit equal to 5% of their eligible earnings, to a maximum of $1,100 per year. The government points out that this measure will benefit workers “who are disproportionately women, Black or racialised, newcomers, working-age and have low to modest incomes.”

13. Individual tax returns filed automatically  
    The budget provides for the implementation of a measure giving the Canada Revenue Agency the ability to file income tax returns on behalf of certain eligible Canadians with lower incomes. This provision will reach up to 5.5 million taxpayers between now and the 2028 tax year, making it possible to deliver federal benefits automatically to these people. 

14. Lowering barriers to access the Canada Disability Benefit  
    If you are eligible for the Canada Disability Benefit, note that a lump sum payment of $150 will now be part of the program as a means of offsetting some of the costs associated with the certification process. Launched last July, the Canada Disability Benefit provides eligible recipients with $2,400 per year in assistance. The $150 payment will be available to anyone receiving the disability benefit before the end of fiscal 2026-2027.

15. Ending on a festive note  
    The Canada Strong pass program, which provides free or reduced admission to national parks, museums and art galleries – in addition to offering discounted or even free travel on VIA Rail –, will be renewed for the holiday season, from December 12, 2025, to January 15, 2026. The program will also be returning next summer.

This budget marks the start of a new tradition: from now on, the government will be tabling its budgets in the fall instead of the spring. If you would like to learn more about this first autumn budget, you can find all the details on the Government of Canada website.

And never hesitate to talk to your advisor, who can provide you with insight and offer recommendations.