Thank you for the invitation to be here today.
I'm here to speak on part 1 of the bill.
Part 1 of Bill C-4 lowers the first personal income tax rate—which applies to taxable income up to $57,375—in 2025 from 15% to 14%, effective July 1, 2025.
You'll note that in the legislation there are two rates. Since income is reported in taxes calculated on an annual basis, the full-year tax rate for 2025 would be 14.5% to reflect the tax rate cut coming into force halfway through the year. The full-year rate for 2026 and future tax years would be 14%.
In terms of administration, the Canada Revenue Agency has updated its withholdings tables and its communications with employers and pay administrators to reflect the rate reduction. Since July 1, individuals with employment income or other income subject to source deductions could have tax withheld at 14% for the second half of this year. Otherwise, individuals will realize the tax relief when they file in the spring.
This change is expected to benefit nearly 22 million Canadians. Individuals who benefit would receive tax relief of up to $420 in 2026, which is the first full year where the rate will be 14%. Two-income families would receive relief of up to $840. Tax savings for 2025 are expected to be roughly half of this amount.
Thank you.