The 2024 tax season may be months away, but it’s never too early to start planning for your 2025 earnings. Revenu Québec and the Canada Revenue Agency (CRA) have recently announced the income tax brackets for 2025, giving Quebec residents a clearer picture of how much income tax they’ll owe in the upcoming year.
Understanding Canada’s Progressive Tax System
In Canada, income taxes work on a progressive system, meaning the more money you earn, the higher the tax rate on that income. However, this only applies to the portion of your income that falls into each tax bracket. So, while earning more might push you into a higher tax bracket, it doesn’t mean all of your income will be taxed at that higher rate. Additionally, tax brackets are adjusted annually for inflation, which may result in paying less tax if your income remains the same.
Quebec’s Provincial Tax Brackets for 2025
Revenu Québec has indexed the provincial tax brackets by 2.85% for 2025. If your income stays the same, your taxes will not increase, as only the brackets have been adjusted, not the tax rates. Here’s how Quebec’s provincial income tax brackets break down for 2025:
- 14% on the first $53,255 of taxable income
- 19% on taxable income over $53,255 up to $106,495
- 24% on taxable income over $106,495 up to $129,590
- 25.75% on taxable income above $129,590
These rates apply to the provincial portion of your taxes. Remember, you will also need to pay federal taxes, which have their own brackets and rates.
Canada’s Federal Tax Brackets for 2025
At the federal level, the CRA has set the indexation rate for 2025 at 2.7%. Here’s how your income will be taxed at the federal level:
- 15% on the first $57,375 of taxable income
- 20.5% on taxable income over $57,375 up to $114,750
- 26% on taxable income over $114,750 up to $177,882
- 29% on taxable income over $177,882 up to $253,414
- 33% on taxable income above $253,414
These federal tax rates are applied alongside the provincial rates to determine your total income tax.
What is the Basic Personal Amount (BPA)?
The Basic Personal Amount (BPA) is a non-refundable tax credit that reduces the amount of your income that is subject to tax. For 2025, the provincial BPA in Quebec will increase to $18,571. This means that the first $18,571 of your income will be exempt from provincial income tax.
At the federal level, the BPA for 2025 ranges from $14,538 to $16,129, depending on your income level. If you make $177,882 or less, you qualify for the maximum federal BPA of $16,129.
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Important Notes
- These tax brackets apply to income earned in 2025, not the taxes you’ll file in 2024 for your 2024 income.
- If you’re looking for information on the tax brackets for the current year (2024), be sure to consult Revenu Québec and the CRA’s official resources for up-to-date details.
Understanding these tax changes ahead of time will help you plan your finances and potentially lower your tax burden for 2025.
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