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

“Tax hikes will give Ontarians a hangover in the new year,” said Jay Goldberg, CTF Ontario Director. “Many Ontarians are facing income tax hikes in 2025 because the province fails to move some of its tax brackets with inflation.”

Bracket creep: The Ontario government is raising income taxes on Ontarians making less than $60,000 by failing to adjust its Low-Income Individuals and Families (LIFT) tax credit to inflation, so lower-income Ontarians who get a cost-of-living pay raise will see their income tax bills increase in 2025.

Ontario also doesn’t adjust its two higher income tax brackets to inflation, meaning Ontarians pushed into the province’s upper tax brackets through cost-of-living pay raises will also pay more in income taxes next year.

Ontario Health Premium: The Ontario Health Premium is automatically deducted from the wages of Ontarians earning more than $20,000 per year and that threshold is not adjusted with inflation. The tax begins at $300 and rises to $900 based on income. The OHP brackets are not adjusted for inflation, meaning that every Ontarian earning more than $20,000 is subject to OHP bracket creep.

Ontarians are also facing significant tax hikes at the federal level in the new year.

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 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.

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 save taxpayers up to $2.7 billion.

“Canadians pay too much tax because the government wastes too much money,” said CTF Federal Director Franco Terrazzano. “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.