As 2025 unfolds, Canadians can expect notable updates in pensions, family allowances, tax brackets, and retirement savings plans. These changes aim to align with inflation and evolving economic conditions while introducing adjustments to benefit payments and tax rules. Here’s a comprehensive guide to the financial updates that will impact Canadian and Quebec residents this year.
Table of Contents
1. Updates to the Quebec Pension Plan (QPP)
The Quebec Pension Plan (QPP) has introduced significant changes, including benefit increases for retirees and contributors.
Key Changes to QPP Benefits in 2025:
- Average Retirement Pension at 65: Increased from $682 to $700/month.
- Average Retirement Pension at 72: Increased from $1,083 to $1,111/month.
- Average Retirement Pension at 60: Increased from $457 to $469/month.
Who Benefits?
Approximately 2.2 million beneficiaries, including those receiving retirement, disability, surviving spouse, disabled contributor’s child, and orphan pensions, will see a 2.6% increase in their payments.
Earnings and Contributions:
- Yearly Maximum Pensionable Earnings: Increased to $71,300 (up from $68,500).
- Basic Exemption: Remains at $3,500.
- Maximum Death Benefit: Still capped at $2,500.
Beneficiaries who opted for direct deposits can expect payments on these dates:
Jan. 31, Feb. 28, March 31, April 30, May 30, June 30, July 31, Aug. 29, Sept. 29, Oct. 31, Nov. 28, and Dec. 30.
2. Old Age Security (OAS) Payment Updates
The Old Age Security (OAS) program will see adjustments to its payment amounts in early 2025 to reflect the increased cost of living.
OAS Payment Rates for Q1 2025:
- Ages 65–74: Maximum benefit is $727.67/month.
- Ages 75 and Older: Maximum benefit is $800.44/month.
These amounts are reviewed and adjusted quarterly, with changes applied in January, April, July, and October, based on the Consumer Price Index (CPI).
Income Thresholds for OAS Repayment:
- Income Over $90,997: Requires partial repayment of OAS benefits.
- Income Over $148,451 (Under 75): Full repayment required.
- Income Over $154,496 (75 and Older): Full repayment required.
Direct deposit recipients can expect their payments on the following dates:
Jan. 29, Feb. 26, March 27, April 28, May 28, June 26, July 29, Aug. 27, Sept. 25, Oct. 29, Nov. 26, and Dec. 22.
CRA Benefit Payment Dates Changed for February 2025: New Schedule and Essential Rules
EI Premium Rate 2025: Federal and Quebec Rates Explained for Employers and Employees
New $800.44 OAS Payment Coming in Jan 2025: Check out this Payout & Dates
3. Family Allowances and Child Benefits
Quebec Family Allowance:
- Increase: Payments will rise by 2.85%, bringing the annual maximum to $3,006 per child.
- Frequency: Payments are made quarterly unless otherwise requested.
Canada Child Benefit (CCB):
- Maximum Annual Payment: Remains at $3,322 per child.
- Payment Schedule: Monthly, around the 20th of each month.
CPP Increase Slows in 2025: What Retirees Need to Know and How to Maximize Benefits
CRA Benefit Payment Dates Changed for February 2025: New Schedule and Essential Rules
4. Tax Changes for 2025
Federal Income Tax Brackets:
To prevent “bracket creep” caused by inflation, income tax brackets will increase by 2.7% in 2025.
- 15% on earnings up to $57,375.
- 20.5% for income between $57,375.01 and $114,750.
- 26% for income between $114,750.01 and $177,882.
- 29% for income between $177,882.01 and $253,414.
- 33% for income above $253,414.
Basic Personal Amount:
- Increased to a range of $14,538 to $16,129, depending on income, up from $14,256 to $15,705 in 2024.
5. Capital Gains Tax Updates
Pending legislative approval, capital gains tax rules will undergo significant changes in 2025:
- Current Rule: 50% of capital gains are taxable.
- New Rule: Gains above $250,000 will see the taxable portion increase to two-thirds.
These changes will apply to capital gains earned after June 24, 2024.
6. Registered Retirement Savings Plans (RRSPs)
The RRSP contribution limits for 2025 have increased:
- New Contribution Limit: $32,490 (up from $31,560).
- Contribution Deadline: March 3, 2025.
Unused contribution room from previous years can still be carried forward.
7. Working Later in Life: Tax Credit Changes in Quebec
Quebec is raising the eligibility age for its tax credit for older workers from 60 to 65 as of January 1, 2025. This change is expected to save the province $877 million over five years but will result in an average loss of $973 per year for affected individuals.
This change reflects the rising average retirement age, which has increased from 61.3 years in 2011 to 64.7 years today.
Conclusion: Financial Planning in 2025
The adjustments to pensions, benefits, tax brackets, and savings plans reflect the government’s efforts to align with inflation while addressing evolving economic needs.
Action Steps for Canadians in 2025:
- Review Your Benefits: Use calculators like those available on Retraite Québec to estimate your QPP benefits.
- Update Information: Ensure personal and banking details are current with benefit providers.
- Plan for Taxes: Understand the changes to tax brackets and deductions to optimize your returns.
- Consider RRSP Contributions: Maximize your retirement savings by taking advantage of the increased limit.
Staying informed about these changes is essential for making the most of your financial opportunities in 2025. Stay proactive and take steps to secure your financial future!