Key Tax Updates Canadians Must Know This Season

Rowan Ashford

Published: February 7, 2026 5:16 PM ET

As tax season approaches in Canada, it’s crucial for Canadians to stay informed about changes that could impact their returns. The Canada Revenue Agency (CRA) will open its Netfile service on February 23, allowing Canadians to begin filing their taxes. Preparations should start early to ensure that taxpayers don’t miss out on any available credits and deductions.

Key Tax Updates Canadians Must Know This Season

With over 400 credits and deductions available, understanding the federal budget is vital. Significant changes were announced that will affect filings in the upcoming tax year.

Middle-Class Tax Cut and Bracket Changes

Last July, the government introduced a middle-class tax cut. Starting in 2025, the lowest marginal personal income tax rate was reduced from 15% to 14.5%. As of January 1, this rate was further decreased to 14% for 2026, impacting how the first $57,375 of taxable income is taxed.

Majority of tax relief benefits individuals in the two lowest brackets.
Expected maximum tax savings are $420 per person and $840 per couple in 2026.
Overall, this measure will deliver over $27 billion in tax savings across five years.

According to tax experts, these changes may rectify the overpayment of taxes experienced in the first half of 2025.

Canada Groceries and Essentials Benefit

The government recently announced the Canada Groceries and Essentials Benefit. This initiative aims to provide financial relief for rising grocery prices among low-income Canadians.

A one-time payment, equivalent to a 50% increase in the annual GST credit, will be issued by June 2026.
The benefit will increase by 25% over five years starting in July 2026.
This could provide $11.7 billion in additional support, indexed to inflation.

To be eligible for the one-time top-up, taxpayers need to file their 2025 taxes on time.

CRA to Automatically File Returns for Low-Income Canadians

In a bid to ease filing burdens, the CRA will be able to automatically file tax returns for low-income individuals, ensuring they can access benefits like the Canada Child Benefit.

This initiative is set to affect the 2025 tax year and potentially assist up to 5.5 million Canadians by 2028.

Removal of Certain Taxes

Several tax measures have been eliminated, impacting how some individuals file their taxes:

The underused housing tax, a 1% annual tax on vacant residential properties owned by non-residents, is no longer applicable as of 2025.
Luxury taxes on vehicles exceeding $100,000 and boats over $250,000 were scrapped on November 5, 2025.
The consumer carbon tax was officially eliminated on April 1, 2025, alongside the Canada Carbon Rebate.

It’s important for Canadians to navigate these changes aware of their implications. As the tax season approaches, filing on time is crucial to maximize potential benefits.