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What’s changing for personal finance in 2025, from capital gains to tax brackets

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What’s changing for personal finance in 2025, from capital gains to tax brackets

We have reached the end of a year of change, in which our leaders turned their attention from tamping down inflation to spurring a lagging economy. It also saw the federal government releasing a host of new policies, as it prepared for an election in 2025.

We outline some of the biggest changes in personal finance coming in the new year.

Capital-gains inclusion rate

The federal government’s move to raise the capital-gains inclusion rate was the headline policy in its 2024 budget. Canadians will feel its impact for the first time when filing their taxes in 2025.

As of June 25, the capital-gains inclusion rate of 50 per cent for individuals only applies to profits under $250,000. All profits above $250,000 will face a 66.7-per-cent inclusion rate.

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Since most Canadians invest in tax-sheltered accounts such as tax-free savings accounts, the majority of people will be shielded from any tax changes. But anyone selling a secondary home or significant non-sheltered investments could pay thousands more in taxes in a given year.

Public dental care opens to all eligible people

The Canadian Dental Care Plan, which helps cover costs at the dentist’s office for Canadians without insurance, started rolling out in 2024 for seniors and people under 18.

In 2025, Ottawa will open the program to the remaining eligible Canadians. Eligibility requirements include a net family income under $90,000, being a Canadian resident for tax purposes, and having filed a tax return in the previous year.

Between 40 per cent and 100 per cent of eligible costs will be covered, depending on income.

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Tax bracket adjustments

As inflation slows down, so does the increase in federal tax brackets. All five brackets will rise by 2.7 per cent for 2025, compared with an increase of 4.7 per cent for 2024.

GST holiday and rebate cheques

Two spending incentives unveiled by Ottawa in November will have a large part of their impact in 2025.

First, a federal sales-tax holiday on specific goods that started mid-December will last until Feb. 15. In some provinces, consumers will also be exempt from paying the provincial portion of sales tax. Exempted purchases include restaurant meals, books, beer and wine.

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The government also said it would send $250 rebate cheques to Canadians in April. However, that program wasn’t included in the GST holiday legislation or the fall economic statement in December, as the Liberals did not anticipate enough support for the measure in Parliament. The cheques were to be sent to Canadians who worked in 2023 and made under $150,000 in net individual income.

B.C. introduces anti-home-flipping tax

A tax meant to prevent the short-term holding of homes for profit will go into effect on Jan. 1 in British Columbia.

Anyone selling a home that they have owned for less than 730 days will be subject to a 20-per-cent tax on any profit.

The tax is distinct from the federal government’s rules to discourage property flipping, which treat profits as fully taxable on an individual’s income-tax return.

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New rules for down payments and mortgages

New mortgage rules will allow Canadians to make smaller down payments on properties valued at more than $1-million. Previously, buyers had to have a down payment of at least 5 per cent for homes valued under $500,000, 10 per cent for every dollar between $500,000 and $1-million, and 20 per cent of every dollar over $1-million.

As of mid-December, buyers now have to have a 5-per-cent down payment up to $500,000, and 10 per cent between $500,000 and $1.5-million. The 20-per-cent minimum now starts at $1.5-million.

Insured mortgages will also be allowed on homes of up to $1.5-million, up from a $1-million cap previously. Insured mortgages come with lower interest rates when purchasing a home with a down payment below 20 per cent, but they require the purchase of an insurance premium that is rolled into the mortgage.

First-time buyers and buyers of new builds will also have access to 30-year mortgages, up from the previous cap of 25 years.

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Easing loan access for building secondary suites

The federal government is adding two new ways to make it easier to finance a secondary suite, such as a basement rental unit, for an existing home.

The first is the Canada Secondary Suite Loan Program, which will give homeowners access to a low-cost loan of up to $80,000 to build a suite. It is expected to launch in early January, with 15-year terms and an interest rate of 2 per cent.

Homeowners will now also be able to refinance their insured mortgages if they use the equity to build secondary suites, up to a limit of $2-million. This will allow them to retain the lower rates that come with an insured mortgage when refinancing.

Government sets lower limit on interest rates for lenders

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New loans starting from Jan. 1 will be subject to new rules that set the criminal interest rate at 35 per cent, down from the previous threshold of roughly 48 per cent. The government said the change is meant to crack down on high-interest lending from alternative lenders.

Are you a young Canadian with money on your mind? To set yourself up for success and steer clear of costly mistakes, listen to our award-winning Stress Test podcast.

Finance

German finance minister wants to scrap spousal tax splitting

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German finance minister wants to scrap spousal tax splitting

Last weekend, several thousand people took to the streets in Munich to demonstrate against abortion and assisted suicide. One speaker made an extremely dramatic plea against what he called the “culture of death” that has allegedly taken hold in Germany. One sign of this, the speaker argued, was that the government is planning to abolish a regulation known as “spousal tax splitting.”

Is tax law really relevant to deep philosophical debates on the sanctity of life? It is even a matter of life and death at all? Surely we needn’t go that far? In any case, the intense political uproar surrounding the new debate on whether to abolish spousal tax splitting is notable, even by today’s standards of populist outrage.

An advantage for couples with widely divergent incomes

The row was sparked by Germany’s vice chancellor and finance minister, Lars Klingbeil, of the center-left Social Democratic Party (SPD), who said he wanted to abolish and replace the joint taxation of spouses’ income, a system that has been in place since 1958.

How exactly does spousal tax splitting work? In Germany, married couples (and since 2013, couples in civil partnerships), can choose to have their income assessed jointly by the tax authorities.

It means that the taxable income for both spouses together is halved – as if both partners had each earned an equal half of the income. Their tax liability is then determined by simply doubling the income tax due on one half.

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As people who earn more pay higher taxes in Germany, this system benefits couples where one partner (and often this is still the man) earns significantly more than the other (in practice often the woman).

Lars Klingbeil
Lars Klingbeil thinks spousal splitting is outdated and costs the state too muchImage: Bernd von Jutrczenka/dpa/picture alliance

Costs of up to €25 billion per year

If for example one partner earns €60,000 ($70,512) a year and the other partner earns nothing, the couple will be taxed as if they earned €30,000 each. In this example, the couple would save nearly €5,800 in taxes per year compared to the amount they would owe if both partners filed their taxes separately. According to the Finance Ministry, spousal tax splitting costs the government a total of up to €25 billion annually.

Some critics have long viewed splitting as a tool to keep women out of the labor market, because the more a woman earns, the larger her tax burden becomes. Klingbeil seems to agree, arguing on ARD television in late March that the system was “out of step with the times.” The spousal splitting system reflects “a view of women and families that is completely at odds with my own,” he said.

Chancellor Merz said to be in favor of splitting

On Monday of this week, Klingbeil got some surprising support on this from Johannes Winkel, head of the youth wing of the conservative Christian Democratic Union (CDU).

“Given the demographic reality, the government should create incentives to ensure that both partners in a relationship are employed,” Winkel told the Funke Media Group. “In the future, tax relief should primarily be granted to married couples when they are facing hardships related to raising children.”

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But the chancellor is a vocal skeptic of the proposal. “I am not convinced by the claim that joint filing for married couples discourages women from working,” Friedrich Merz said at a conference organized by the Frankfurter Allgemeine Zeitung newspaper. “Marriage is a relationship based on shared income and mutual support. And in a marriage, income must be treated as a joint income for tax purposes, not separately.”

Berlin under pressure to fix pensions, health care and taxes

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Klingbeil’s alternative plan

At around 74%, the labor force participation rate for women in Germany is one of the highest in Europe, but half of them work part-time.

Klingbeil’s idea is to replace the existing system with a more flexible approach: Both partners would be able to distribute tax-free income among themselves in such a way that it minimizes their tax liability. This would allow the couple to continue enjoying a tax advantage, albeit not to the same extent as before. And whether one partner earns more than the other would become less important.

However, it remains to be seen whether Klingbeil will be able to push through his proposal. Aside from Germany, similar regulations offering tax benefits to couples exist in Poland, Luxembourg, Portugal and France.

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This article was originally written in German.

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Departing inspector general targets Council Office of Financial Analysis

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Departing inspector general targets Council Office of Financial Analysis

The $537,000-a-year office created in 2014 to advise the City Council on financial issues and avoid a repeat of the parking meter fiasco has failed to deliver on that mission, the city’s chief watchdog said Tuesday.

Days before concluding her four-year term, Inspector General Deborah Witzburg said a shortage of both adequate staff and financial information closely held by the mayor’s office prevents the Council’s Office of Financial Analysis from helping the Council be the the “co-equal branch of government” it aspires to be.

In a budget rebellion not seen since “Council Wars” in the 1980s, a majority of alderpersons led by conservative and moderate Democrats rejected Mayor Brandon Johnson’s corporate head tax and approved an alternative budget, including several revenue-generating items the mayor’s office adamantly opposed.

But Witzburg said the renegades would have been in an even better position to challenge Johnson if only their financial analysis office had been “equipped and positioned to do what it’s supposed to do” — provide the Council with “objective, independent financial analysis.”

“We are entering new territory where the City Council is asserting new, independent authority over the budget process. It can’t do that in a meaningful way without its own access to financial analysis,” Witzburg told the Chicago Sun-Times.

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Chicago Inspector General Deborah Witzburg’s latest report focuses on the Chicago City Council’s Office of Financial Analysis.

Jim Vondruska/Jim Vondruska/For the Sun-Times

But the Council’s financial analysis office, she added, “has never been equipped or positioned to do what it needs to do. It needs better and more independent access to data, and it needs enough staff to do its job. It has a small number of employees and comparatively limited access to data.”

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The inspector general’s farewell audit examined the period from 2015 through 2023. During that time, the financial analysis office budget authorized “either three or four” full-time employees. It now has a staff of five .

Witzburg is recommending a staffing analysis to identify how many people the financial office really needs — and also recommending that the office “get data directly” from other city departments, “ rather than having it go through the mayor’s office.”

The audit further recommends that the office develop “better procedures to meet their reporting requirements” in a timely manner. As it stands now, reports are delivered “sometimes late, sometimes not at all,” the inspector general said.

“We find that those reports have been both not timely and not complete in terms of what they are required to report on and that those reports therefore have provided limited assistance to the City Council in its responsibility to make decisions about the city’s budget,” she said.

The Council Office of Financial Analysis responded to the audit by saying it hopes to add at least three full-time staffers in the short term and has made “some progress” over the last three years in improving their access to data, but not enough.

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The office was created in 2014 to provide Council members with expert advice on fiscal issues.

For nearly two years the reform was stuck in the mud over whether former 46th Ward Ald. Helen Shiller had the independence and policy expertise to lead the office.

Shiller ultimately withdrew her name, but the office was a bust nevertheless. In an attempt to breathe new life into it, sponsors pushed through a series of changes.

Instead of allowing the Budget chair alone to request a financial analysis on a proposal impacting the city budget, any alderperson was allowed to make that request.

The office was further required to produce activity reports quarterly, not just annually.

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Now former-Budget Chair Pat Dowell (3rd) then chose Kenneth Williams Sr., a former analyst for the office, as director and gave him the “autonomy” the ordinance demanded.

Two years ago, a bizarre standoff developed in the office.

Budget Committee Chair Jason Ervin (28th) was empowered to dump Williams after Williams refused to leave to make way for a director of Ervin’s own choosing.

The standoff began when Williams said he was summoned to Ervin’s office and told the newly appointed Budget chair was “going in a different direction, and I’m putting you on administrative leave” with pay.

“He took all my credentials and access away. I would love to come to work. I wasn’t allowed to come to work,” Williams said then.

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Williams collected a paycheck for doing nothing while serving out the final days remainder of a four-year term.

Ervin’s resolution stated the director “may be removed at any time with or without cause by a two-thirds” vote or 34 alderpersons. He chose Janice Oda-Gray, who remains chief administrator.

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Reilly Barnes Returns to Little League® as Purchasing/Finance Assistant

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Reilly Barnes Returns to Little League® as Purchasing/Finance Assistant

Little League® International has announced that Reilly Barnes accepted a new role as Purchasing/Finance Assistant, effective April 6, 2026. Barnes transitions from a temporary Purchasing Assistant to this full-time position to assist in the year-round demands of purchasing for the organization, as well as the region and Little League Baseball and Softball World Series tournaments. 

“We are thrilled to welcome back Reilly to our team as a full-time Purchasing/Finance Assistant. Reilly’s prior experience, time management, and attention to detail make him an invaluable asset to the purchasing team,” said Nancy Grove, Little League Materials Management Director. “We look forward to the positive contributions he will have on our organization.” 

In this role, Barnes will be responsible for processing purchase requisitions, coordinating souvenir products, and tracking order fulfillment. He will also assist with evaluating suppliers, reviewing product quality, and negotiating contracts for effective operations.  

After most recently working as a Logistician Analyst at Precision Air in Charleston, South Carolina, Barnes, a Williamsport native, returns after honing his skills in the fast-paced environment. Prior to his time at Precision Air, Barnes served as a Procurement Specialist at The Medical University of South Carolina, where his expertise and knowledge were instrumental in supporting both education and healthcare needs.  

“I am thrilled to return to Little League in this full-time role,” said Barnes. “Coming back to my hometown and having the opportunity to work for an organization that has played such a special part of my upbringing means a lot. I can’t wait begin this new opportunity.” 

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Barnes graduated from the University of Pittsburgh in 2022 with a B.A. in Supply Chain Management, Finance, and Business Analytics.  

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