OTTAWA, ON: The Canadian Taxpayers Federation released its annual New Year’s Tax Changes report today to highlight major tax changes in 2025.

“Tax hikes will give Canadians a hangover in the new year,” said Franco Terrazzano, CTF Federal Director. “In 2025, the Trudeau government will yet again take more money out of Canadians’ pockets with payroll tax hikes and will make life more expensive by raising carbon taxes and alcohol taxes.”

Payroll taxes: The federal government is raising the mandatory Canada Pension Plan and Employment Insurance contributions in 2025. These payroll tax increases will cost a worker up to an additional $403 next year.

Federal payroll taxes (CPP and EI tax) will cost a worker making $81,200 or more $5,507 in 2025. Their employer will also be forced to pay $5,938.

Carbon tax: The federal carbon tax is increasing to about 21 cents per litre of gasoline, 25 cents per litre of diesel and 18 cents per cubic metre of natural gas on April 1. The carbon tax will cost the average household between $133 and $477 in 2025-26, even after the rebates, according to the Parliamentary Budget Officer. 

Alcohol taxes: Federal alcohol taxes will increase by two per cent on April 1. This alcohol tax hike will cost taxpayers $40.9 million in 2025-26, according to Beer Canada estimates.

First passed in the 2017 federal budget, the alcohol escalator tax automatically increases excise taxes on beer, wine and spirits every year without a vote in Parliament. Since being imposed, the alcohol escalator tax has cost taxpayers more than $900 million, according to Beer Canada estimates.

Following Budget 2024, the federal government also increased capital gains taxes and imposed a digital services tax and an online streaming tax.

Temporary sales tax holiday: The federal government announced a two month sales tax holiday on certain items like pre-made groceries, children’s clothing, drinks and snacks. The holiday will last until Feb. 15, 2025, and could save taxpayers $2.7 billion. 

“Canadians pay too much tax because the government wastes too much money,” Terrazzano said. “Prime Minister Justin Trudeau should drop his plans to take more money out of Canadians’ pockets and deliver serious tax relief.”

You can find the CTF’s New Year’s Tax Changes report here.