The average Canadian family will save $280 next year from the Liberal government’s income tax cut, significantly less than initially promised, the Parliamentary Budget Officer said Wednesday.
The analysis released by budget officer Yves Giroux shows the tax reduction will provide modest relief compared to the Liberal campaign pledge of up to $825 in annual savings for dual-income families.
The tax cut reduces the federal rate on the first $57,375 of taxable income from 15% to 14.5% this year, dropping to 14% in 2026. Prime Minister Mark Carney made the middle-class tax relief a centerpiece of his 2025 election campaign.
“More than 22 million Canadians will benefit directly from this tax cut,” the Liberal Party said when announcing the measure earlier this year.
However, the Parliamentary Budget Officer’s assessment reveals uneven benefits across different groups. Single seniors will save only about $50, while some high-income earners could see savings of up to $350. Low-income individuals may benefit less due to existing tax credits.
The House of Commons unanimously approved the tax changes through a ways and means motion on June 5, with Conservative Leader Pierre Poilievre supporting the cuts while arguing they should go further.
The budget officer estimates the tax cut will cost $64 billion over five years, though the net cost drops to $28 billion when accounting for reductions in federal tax credits. Finance Canada had projected costs around $27 billion over the same period.
The tax changes take effect July 1, though formal legislation is still working through Parliament.
Critics argue the cuts are poorly timed given Canada’s budget deficit, projected at $50 billion for 2024-2025 with no return to balance expected through 2029-2030.
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