New Canada laws and rules effective 2025 that you must know

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New Canada laws and rules effective 2025 that you must know

January 3, 2025
9:39 am

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Last Updated On 3 January 2025, 8:42 AM EST (Toronto Time)

As 2025 begins, Canadian residents will experience significant changes in federal and provincial laws.

These updates aim to address pressing issues like affordability, inflation, and social equity, affecting everything from minimum wages to tax rules.

Here is a comprehensive look at the most important changes to existing rules that will be effective in 2025.

Minimum wage adjustments will take place in several provinces and federally regulated industries:

Federal Minimum Wage: Effective April 1, 2025, the federal minimum wage will increase to $17.70 per hour from $17.30.
Ontario: Annual adjustments will continue on October 1, with a forecasted increase from the current $17.20 per hour.
British Columbia: As of June 1, 2025, the province’s minimum wage will increase from $17.40 per hour.
Yukon, Nova Scotia, New Brunswick: Minimum wage adjustments are scheduled for April 1, 2025, with current rates at $17.59 (Yukon), $15.20 (Nova Scotia), and $15.30 (New Brunswick).

The increases reflect ongoing efforts to combat inflation and ensure that workers have sufficient earnings to meet the rising cost of living.

Federal Income Tax Brackets Adjusted for Inflation

To reflect a 2.7% inflation rate, the Canada Revenue Agency (CRA) has revised the 2025 tax brackets:

15%: Up to $57,375
20.5%: $57,375 to $114,750
26%: $114,750 to $177,882
29%: $177,882 to $253,414
33%: Above $253,414

These adjustments ensure that Canadians are not pushed into higher tax brackets solely due to inflation, preserving their purchasing power.

TFSA and RRSP Contribution Limits

TFSA: The annual contribution limit remains $7,000, with a cumulative limit of $102,000 for eligible Canadians as of January 2025.
RRSP: The contribution limit increases to $32,490, up from $31,560 in 2024, offering enhanced retirement savings opportunities.

Corporate Tax Changes

Small business tax rates will remain at 9%, but new environmental tax credits are introduced for businesses adopting green technologies.

Businesses that transition to renewable energy sources or adopt carbon-neutral practices can claim these credits, incentivizing sustainable growth across sectors.

The CPP continues its enhancement plan to improve retirement benefits. Key 2025 updates include:

Employee Contributions: Rates remain at 5.95%, with a maximum contribution of $4,034.10.
Self-Employed Contributions: Maximum contribution rises to $8,068.20.
Additional CPP Contributions (CPP2): Applies to income between $71,300 and $81,200, with maximum contributions of $396 (employee/employer) and $792 (self-employed).

These changes aim to secure the long-term sustainability of the pension system while providing higher benefits for future retirees.

The 2025 EI premium rates are:

$1.64 per $100 of insurable earnings (employees), with a maximum contribution of $1,077.48.
$2.30 per $100 (employers), with a maximum of $1,508.47.
In Quebec, rates are lower: $1.31 per $100 (employees) and $1.83 per $100 (employers).

Expanded EI Sickness Benefits

Canadians will now have access to up to 28 weeks of EI sickness benefits, up from 26 weeks in 2024.

This extension aims to provide more robust support for individuals recovering from serious illnesses or injuries.

The Canadian Dental Care Plan expands in 2025 to cover all eligible Canadians.

Families earning less than $90,000 annually will receive subsidies covering 40% to 100% of dental care costs based on income.

This comprehensive plan eliminates significant barriers to oral health care and is expected to improve overall public health outcomes.

Starting January 2025, the Canada Child Benefit (CCB) will extend payments for up to six months following the death of a child, offering additional financial support to grieving families.

New CCB Indexing for Inflation

To help families cope with rising living costs, CCB payments will be indexed to a 2.7% inflation rate, increasing the maximum benefit per child.

This ensures that families relying on the CCB maintain their standard of living despite inflationary pressures.

To improve housing affordability, new mortgage rules include:

Lower Down Payments: 5% on the first $500,000, 10% for amounts between $500,000 and $1.5 million.
Higher Price Caps: Insured mortgages are now available for homes up to $1.5 million.
Extended Amortization: 30-year amortizations are allowed for insured mortgages on preconstruction homes.

These changes are designed to make homeownership more accessible to first-time buyers, addressing the housing crisis across the country.

For 2025, the capital gains inclusion rate rises from 50% to 66.7% for companies and individuals.

For individuals, this rate applies only to gains exceeding $250,000.

While this may increase tax burdens, the revenue generated is intended to fund critical social programs and infrastructure.

British Columbia

Anti-Home-Flipping Tax: A new 20% tax applies to property sales within two years of purchase, effective January 1, 2025. Exceptions include divorces and job losses.
Rent Cap: Rent increases are capped at 3%, down from 3.5% in 2024.
New Climate Action Rebates: B.C. introduces quarterly rebates of up to $400 per household for low- and middle-income families adopting energy-efficient home upgrades.

These measures aim to curb speculation in the housing market, protect renters, and incentivize environmentally friendly practices.

Ontario

Child-Care Fee Caps: Fees in participating centers under the $10-a-day program will be capped at $22 per day, with further reductions by 2026.
Immigration Act Revisions: Stricter standards for immigration representatives now require licensure and written contracts, with penalties for violations including fines and lifetime bans.
Affordable Transit Program: Ontario will expand affordable transit passes for low-income individuals, reducing fares by up to 50% in major cities.

Several new programs and initiatives across Canada aim to address systemic inequities and promote inclusivity. For example:

Indigenous Support Programs: Additional funding will be allocated to improve access to education, healthcare, and housing for Indigenous communities.
Gender Equity Initiatives: Employers with more than 100 employees will be required to report on gender pay gaps and implement corrective measures.

These policies reflect Canada’s commitment to creating a fair and equitable society for all residents.

The new laws in 2025 reflect efforts to enhance economic equity, affordability, and quality of life for Canadians.

From higher wages to expanded social benefits, these changes aim to support individuals and families across the country.

Staying informed will help Canadians maximize the opportunities these updates present.

As these changes take effect, they are expected to influence Canada’s economic landscape significantly.

Canadians are encouraged to review these new measures closely, seek professional advice where necessary, and take full advantage of the benefits provided.

Gagandeep Kaur Sekhon

Gagandeep Kaur Sekhon moved to Canada in 2010 on a study visa. She navigated through the ups and downs of her student life and gained her permanent residency in 2015. Today, she is a proud Canadian citizen residing in Calgary, Alberta. She is mother of 2 beautiful daughters and making her difference through writing and guidance at INC – Immigration News Canada.