2025 Income tax return guide

Income tax season is officially here. With all the work of gathering up necessary documents, filling in forms, and making payments it can be a stressful time of year. To make things easier we’ve compiled everything you need to know to file your taxes in one spot. Read on to set yourself up for a smooth tax season.

When do you pay taxes?

There are a few important dates to remember during tax filing season.

February 24th, 2025 – You can start filing your taxes from this day online. If you’re filing on paper, you should have received your tax package in the mail by this date.

April 30, 2025 – This is the deadline to file your tax return (for most Canadians). If you file on time, you will receive your refund, benefits, or credit on time. If you still owe taxes, this is also the deadline for paying it. Accordingly, by paying on time, you’ll avoid having to pay late-filing penalties or fees.

June 16, 2025 – If you or your spouse/common-law partner are self-employed, this is the deadline for you to file taxes. Remember though, if you owe taxes, the deadline for paying it is still April 30, 2025.

Additional deadlines

RRSP, PRRP, and SPP contributions have a deadline of 60 days after December 31st. That means, for 2025, the last day to make contributions towards your 2024 return is March 3rd, 2025.

Penalties for late payments

Even if you can’t pay your taxes on time it’s important to still file on time. If you owe a balance and don’t file your income tax return on time, you’ll be charged a late filing penalty. This penalty is 5% of the unpaid 2024 balance at the deadline. There is also an additional 1% penalty for each full month that you file after the due date, up to a maximum of 12 months.

Filing on time won’t help avoid paying interest on any money owed to the CRA after the tax deadline, but at least these charges won’t hit your wallet. Just one more reason filing your taxes on time is a financially sound decision!

Important tax-related changes for 2025

The Basic Personal Income range is now set between $14,538 to $16,129. Your specific amount is based on your income.
Both the primary CPP and secondary CPP2 contribution levels have gone up this year. The max salary for CPP is $71,300, equating up to $4,034.10 tax. The CPP2 salary max is $81,200, equating to a max tax of $396.
Withdrawal guidelines for the Home Buyer’s Plan have increased from $35,000 to $60,000.
Short-term rental operators must now meet all eligibility criteria in order to claim expenses used to operate their rental.
Those who earn income from digital platforms like Doordash and Uber will need to be fully transparent about how much they’ve earned on the platforms. Platforms are now required to report how much each user has earned to the CRA.

Updated Tax Brackets

The federal income tax brackets have been updated for 2025. The new tax rates and income thresholds are:

15% on the portion of taxable income below $57,375, plus,
20.5% on the portion of taxable income between $57,376 to $114,750, plus
26% on the portion between $114,751 to $177,882, plus
29% on the portion between $177,883 to $253,414, plus
33% on the portion above $253,415.

You can find more information on federal, provincial and territorial income tax rates here.

How Do Tax Brackets Work?

The tax bracket system applies a different tax percentage rate to income based on the amount. For example, federal taxes have a tax rate of 15% on the first $57,375 of taxable income. The percentage then increases based on the total taxable income amount. If you earn $58,375, it means you are $1,000 over the first tax bracket. Your tax obligations would therefore be 15% on the first $57,375, plus 20.5% on the remaining $1,000. It does not increase your tax bracket for the full amount to 20.5%. Rather, the higher bracket applies only to the amount greater than the range for the previous bracket. Get an estimate of your tax return through our income tax calculator tool.

Manage your Taxes for Debt

If you end up with an unexpectedly big tax debt and can’t pay the whole amount, don’t worry. There are lots of options available to help. For example, the CRA will work with you to set up a payment plan. The important thing is to address the situation early. Firstly, waiting longer means more financial pressure from fees and penalties. Typically, the longer you wait the fewer options you’ll have to choose from to address the issue too. Additionally, the options left to choose from usually come with more severe consequences. So do yourself a favour and get things sorted out as quickly as possible.

Tax Credits

Tax credits are amounts that reduce the amount of Federal, Provincial, and Territorial taxes you owe. Subsequently, the government, essentially, credits you for already having paid the taxes. Tax credits can be based on a variety of factors and situations, including income, expenses, education, family situation, and more.

Here are some of the tax credits available:

Check out the individual links for eligibility criteria, application instructions and more.

Tax Deductions

Tax deductions are different than tax credits. Instead of being “credited” for already having paid taxes a tax deduction is subtracted from your taxable income to reduce the amount you owe. Here are some of the most common tax deductions – check the links to see if you qualify.

For a complete list of tax deductions, visit the Government of Canada’s website.

How do I file my taxes?

There are multiple ways to file your taxes. Below are some of the available options for filing your tax returns. As always, do your research and make an informed decision. If in doubt, ask an expert for advice!

Certified tax software

You can use CRA-approved tax software to calculate and file your taxes electronically. This can be done online through a computer or even a mobile device. There are free, pay-what-you-can, and full-price software options.

Through a representative

You can complete your taxes through an expert. The cost for this option varies greatly depending on who you file with. Subsequently, check that the representative’s credentials are up to date and what their policies are in regard to error corrections.

Community volunteer tax clinic

Numerous free tax clinics can complete your taxes. These clinics are done on a volunteer basis so they are free, however, this method is only viable for Canadians with a modest income and a simple tax situation.

Documents Needed for Tax Filing

When filing your income taxes, you’ll need specific documents. Listed below are the main categories of documents you’ll need:

SIN and other basic personal information
Income slips like: T4, T4E, T5, RL-1, RL-2, and RL-3
Records of any other income, like self-employment
RRSP Contribution receipts
Receipts for tax deductions, including home office expenses, rent, or charitable donations
Previous year’s Notice of Assessment or reassessment
Any correspondence sent by the CRA

How to increase your income tax return?

Everyone could benefit from a few extra dollars in their pocket these days. There are a few key things you can do to increase your income tax refund or decrease your tax burden.

Take advantage of all the tax credits and deductions you’re eligible for.
Max out your RRSP and TFSA contributions as best you can.
File and pay your taxes on time.
Ask your Human Resources expert if adjusting your tax withholdings would help.
Donate to charity. Partial deductions are available for some charitable donations.
If you’re married or common-law, look into whether income splitting makes sense for you.

While it’s unlikely anyone would call paying taxes their idea of a fun time, it is the duty of every Canadian. Taxes help pay for the many services and infrastructure we use regularly like healthcare and roadways. However, it’s not uncommon for people to find themselves on rocky financial footing because of a big tax bill. If that’s you, our trained Credit Counsellors can help. Contact us to find out how we can help you get back on track with your finances.