T1 tax filing season update: Crucial legislative changes to know about 2025 personal taxes

What changed in personal tax: Rates, benefits, credits, trust reporting, and CRA process updates

Changes to the refundable GST/HST credit (Bill C-19)

The federal government is changing the name of the refundable GST/HST credit to the Canada Groceries and Essentials Benefit (CGEB) and temporarily increasing payment amounts.

One-time “top-up” payment will be received by eligible taxpayers in spring 2026. When combined with the regular quarterly payments, this top-up would effectively increase the total credit for the 2025-2026 benefit year by 50%.

Quarterly payment amounts will temporarily increase by 25% for five years, beginning with the July 2026 payment.

New Canada Disability Benefit "CDB"

As of June 20, 2025, persons with disabilities can apply for the new Canada Disability Benefit (“CDB”). First payments began in July 2025, and benefit amounts are based on adjusted family net income. From July 2025 to June 2026, the maximum benefit amount for an individual is $2,400 ($200 per month). This amount will be adjusted for inflation each year to reflect changes in the cost of living.

Persons with disabilities between the ages of 18 and 64 can apply for the benefit if they have qualified for the Disability Tax Credit and meet the benefit’s other eligibility requirements.

The CDB is not included in the recipient’s income for tax purposes.

Commentary: This benefit is non-taxable and income-tested, so it can change a client’s broader benefits picture. Consider adding an eligibility check to your annual personal tax questionnaire for clients aged 18–64 who may qualify through the DTC.

Expanding the Disability Supports Deduction

Editor’s note: Many of the newly eligible items are common workplace supports (e.g., ergonomic chairs, alternative input devices). The deduction is still tied to a medical practitioner's prescription, so encourage clients to retain documentation before claiming.

For the 2024 and subsequent taxation years, the list of eligible expenses for the Disability Supports Deduction (“DSD”) is expanded if prescribed by a medical practitioner.

For an individual who has an impairment in physical or mental functions, the following costs are now eligible:

• Ergonomic work chair
• Bed positioning device
• Mobile computer cart
• Alternative input device to allow them to use a computer
• Digital pen device to allow them to use a computer

For an individual with vision impairment, the cost of a low-vision navigation device is now eligible for the Disability Supports Deduction.

For an individual who has an impairment in mental functions, the cost of memory or organizational aids is now eligible for the Disability Supports Deduction.

For an individual who suffers from one or more specified disabilities, the cost of a specially trained service animal, including certain related costs, is now eligible for the Disability Supports Deduction.

The CRA is administering this measure in the 2026 filing season.

Commentary: This expansion can create legitimate deductions for clients who previously didn’t meet the narrower list, especially employees working in hybrid/remote setups who require assistive devices.

Home Accessibility Tax Credit

For the 2026 and subsequent taxation years, an expense claimed under the Medical Expense Tax Credit cannot also be claimed under the Home Accessibility Tax Credit.

Commentary: Starting in 2026, expenses may need to be “allocated” to the most beneficial credit. For renovation-heavy files, a quick comparison could prevent the accidental forfeiture of a stronger claim.

Temporary Personal Support Workers Tax Credit

A temporary five-year (2026-2030) Personal Support Workers Tax Credit is being introduced. Eligible workers can claim a refundable tax credit equal to 5% of their eligible income, up to $1,100 per year.

This new tax credit will be available in provinces and territories not covered by a bilateral agreement with the federal government to increase wages for personal support workers.

Commentary: Eligibility depends on whether a bilateral wage agreement covers the province/territory; confirm before assuming the credit is available.

Personal tax increase in British Columbia

Tax increase at the lowest tax rate. In its 2026 budget, the government of British Columbia announced an increase to the lowest personal income tax rate, effective for 2026 and subsequent years. The rate will increase from 5.06% to 5.60%. This increased rate will apply to the first $50,363 of taxable income for 2026, and will appear on paycheques after July 1, 2026, when payroll withholdings are updated.

Freeze on personal income tax brackets and non-refundable tax credits. Effective for the 2027 through to the 2030 taxation years, the personal income tax brackets and non-refundable tax credits are paused at their 2026 income levels. Indexation will return for the 2031 and subsequent taxation years. This change will impact the province’s seven personal income tax brackets and non-refundable personal income tax credits.

Underused Housing Tax

The Underused Housing Tax (“UHT”) has been eliminated as of the 2025 calendar year. No UHT would be payable, and no UHT returns are required to be filed for calendar years 2025 and subsequent. However, all UHT requirements continue to apply for the 2022-2024 calendar years.

Luxury tax on aircraft and vessels

The Select Luxury Items Tax Act (“SLITA”) is being amended to end the luxury tax on subject aircraft and subject vessels. All instances of the tax would cease to be payable after November 4, 2025, including the tax on sales, the tax on importations, and the tax on improvements.

Registrations for the subject aircraft and vessels under the SLITA would be maintained after November 4, allowing registered vendors to claim rebates for which they are eligible. All registrations for the subject aircraft and vessels would be automatically cancelled on February 1, 2028, after which time vendors would no longer be able to claim rebates.

2025 income tax package for paper filers

This year, the CRA will no longer proactively mail the income tax package to individuals. This means paper filers will not automatically receive a 2025 income tax package in the mail. CRA has also removed many federal schedules with low usage rates from the 2025 income tax package.

Commentary: Expect more “Where do I get the package?” calls from paper filers. Consider adding a standard email or checklist link to your client portal and reminding clients to plan earlier if they rely on mailed materials.

T3 filing and bare trusts (Bill C-15)

Editor’s Note: Because this measure was not yet at royal assent at the time of writing, firms may want to monitor CRA admin guidance for any timing or implementation clarifications.

Based on proposed legislation in Bill C-15, Budget 2025 Implementation Act, No. 1, the CRA will not require bare trusts to file a T3 return, including Beneficial Ownership Information of a Trust (Schedule 15), for taxation years ending in 2025. Bare trusts will be required to file for taxation years ending on or after December 31, 2026; the implementation is delayed by another year.

The CRA is also administering amendments proposed by Bill C-15 that would expand the definition of a listed trust. Accordingly, more trusts may be exempt from filing a return. Moreover, trusts that do not meet a listed trust exception that consequently must file a T3 return will not be required to also file Schedule 15 for taxation years ending on or after December 31, 2025.

CRA filing operations updates

Commentary: Trust reporting remains high-risk and fast-changing. The practical impact is less about theory and more about which clients need outreach, what year-end triggers apply, and whether Schedule 15 is required.

If this is something handled often, consider building a mini decision checklist: “Is it a bare trust? What is the taxation year-end? Does it meet the listed trust exceptions? Is Schedule 15 required?”

Changes to the voluntary disclosures program

The following changes to the Voluntary Disclosures Program (“VDP”) came into effect on October 1, 2025:

Simplified application form. The application form, Form RC199, Voluntary Disclosures Program (VDP) Application, has been updated to make it simpler and easier to use.

Increased eligibility. Taxpayers and registrants who receive communications about a potential non-compliance issue will be eligible for the program. However, the CRA will continue to restrict VDP eligibility for taxpayers and registrants under audit or investigation, as well as for those who were egregiously non-compliant.

Updated relief. The VDP will offer two new relief tiers:

• General relief: Normally applies to unprompted applications, which can receive 75% relief of the applicable interest and 100% relief of the applicable penalties; and
• Partial relief: Normally applies to prompted applications, which can receive 25% relief of the applicable interest and up to 100% relief of the applicable penalties.

Documentation. For situations involving non-compliance over multiple years, the taxpayers and registrants should include documents for the following number of years:

• For foreign-sourced income or assets, the most recent 10 years.
• For Canadian-sourced income or assets, the most recent six years.

The CRA may request additional documents for tax years or reporting periods beyond the above timeframes.

Changes to EFILE

Direct deposit changes. Beginning March 24, 2025, the CRA no longer accepts direct deposit updates or changes submitted via EFILE. Taxpayers must now register for direct deposit in one of the following ways:

• Using My Account online
• Through a Canadian bank or credit union
• Completing a direct deposit enrolment form (paper)

Starting July 15, 2025, the Authorize a Representative service in EFILE software is no longer available for individuals. As a result, Represent a Client will be needed to obtain access. However, this change will not impact authorization requests submitted through EFILE for Business clients. Individual clients can provide instant access to their account if they can do one or more of the following:

• Use My Account to add a representative or to confirm an authorization request
• Give previously assessed tax information to provide when the initial authorization request is submitted in Represent a Client.

EFILE accounts and T1 software. The CRA will also be associating EFILE accounts with specific T1 software. When an EFILE account is renewed, the CRA will associate that account with preferred software products based on past usage. The preferred software can be changed by calling the EFILE helpdesk.

If a T1 return is submitted using software other than the one linked to the EFILE account, the return will be rejected.

Commentary: These changes can directly impact turnaround time. Returns can be rejected if filed under non-linked software, and authorization workflows may require new client steps — so update your internal process docs and client instructions.

Digital by default

The CRA is making digital mail the default method of communication. Starting July 3, 2025, the CRA transitioned the delivery method for most mail from paper to online for approximately 500,000 benefit recipients.

As of September 4, 2025, Phase 2 of this project will expand to include an additional 900,000 individuals, broadening the scope beyond just benefit recipients. Email (and sometimes paper mail) notifications will be sent to affected taxpayers. For most types of correspondence, they will no longer receive paper mail from the CRA.

Commentary: If clients don’t actively monitor CRA online mail, they may miss time-sensitive notices. Consider adding a “CRA mailbox check” reminder into your engagement kickoff and mid-season follow-ups.