Canada Enacts Middle-Class Tax Cut Saving 22 Million Citizens

Canada's Prime Minister Mark Carney announced a middle-class tax cut effective July 1, 2025, aiming to ease the cost of living for 22 million Canadians, particularly benefiting two-income families with savings up to $840 annually. The tax cut reduces the lowest personal income tax rate to 14 percent starting in 2026, with a transitional rate of 14.5 percent for the latter half of 2025, and nearly half of the relief targets individuals earning less than $57,375. The Canada Revenue Agency has updated source deduction tables to immediately reflect reduced tax withholdings in paychecks starting July 1, allowing workers to see increased take-home pay without waiting for tax returns. This policy is part of the new government’s broader agenda to build a stronger, fairer Canadian economy by reducing taxes, lowering everyday costs, and diversifying trade strategies. However, some critiques note that the tax cut primarily benefits middle-class taxpayers with steady employment, while offering limited immediate relief for those struggling with affordability now. Meanwhile, Alberta’s government implemented its own income tax cut, lowering the lowest rate from 10 to 8 percent for earnings up to $60,000, saving the average two-person family about $1,500 annually and providing more immediate financial relief.