What’s changed for tax credits
In Bill C-4 (Making Life More Affordable for Canadians Act), the lowest federal marginal income tax rate was lowered from 15 % to 14.5 % for the 2025 taxation year, and further down to 14 % starting in 2026. (canada.ca)
Non-refundable tax credits (like the Basic Personal Amount, Disability Credit, Tuition, etc.) are valued by multiplying the claimable amount by the lowest tax rate. For instance, a $1,000 credit under the 15 % rate yields $150; under 14 %, it yields $140. So lower rates mean a smaller tax benefit per dollar of credit. (canada.ca)
Introducing the Top-Up Tax Credit
To ensure that this rate cut doesn’t leave anyone worse off, the government passed Bill C-15, which provides a Top-Up Tax Credit for individuals whose non-refundable tax credits exceed the first income tax bracket threshold (for 2026, that’s $58,523 in taxable income). This ensures amounts above that threshold are effectively credited at the old 15 % rate. (canada.ca)