The Year in Money: Notable Personal Finance Changes for 2025 – MoneySense

Interest rates and inflation

Price growth stabilized this year, allowing the Bank of Canada to cut its key interest rate by a full percentage point to 2.25% in 2025. But with higher prices already baked in, an increasing number of consumers were struggling with debt. The annual inflation rate fell to 2.2% in October, according to the latest available data, although pressures remained in key areas.

“Essential costs remain high as grocery prices rose 3.4% year-over-year, and food costs continue to outpace headline inflation,” Natasha Macmillan, senior business director of everyday banking at Ratehub.ca, said by email. “When you add higher tariffs and supply chain costs, daily expenses remain a challenge for many households.”

The higher costs have also led to more Canadians falling behind on payments. Equifax Canada said non-mortgage delinquencies reached 1.63% in the third quarter, up 14% from a year earlier, while the average non-mortgage debt rose $511 from the year before to $22,321.

Taxes in 2025

The federal government introduced a 1% income tax cut this year, lowering the lowest marginal rate to 14%. Because the discount was implemented halfway through the year, the effective rate this year will be 14.5%. The full reduction will take effect in 2026. That means a savings of about $206 this year, and a tax cut of $420 next year, or a potential $840 in savings for a dual-income household. “For many middle-income households, this change could provide noticeable after-tax relief,” Macmillan said.

Prime Minister Mark Carney also canceled the increase in the capital gains rate proposed by his predecessor. The increase would have made two-thirds of capital gains subject to income tax, but instead it remains half. Advocates had noted that the withdrawal rate would only have changed for people with $250,000 or more in capital gains and would affect an estimated 0.13% of Canadians, but Carney said halting the increase should catalyze investment and encourage entrepreneurs to take risks.

For those looking to buy a first home, they were eligible for a GST rebate on new homes up to $1 million for purchases on or after May 27. The government has yet to pass legislation allowing payouts, but the rebate will save first-time buyers up to $50,000. Homes selling between $1 million and $1.5 million will receive a partial discount.

In his first step as prime minister, Carney also scrapped the personal carbon tax from April 1, saying it was too divisive. However, the repeal of the carbon tax and associated rebates still meant that many Canadians led the way, especially those who drive less. The government had estimated the net benefit to households last year at between $157 and $723, depending on the province, with lower-income Canadians generally seeing higher benefits.

Banking

An extensive program will be in place at the beginning of December to offer cheap and free bank accounts. Canadians can now get a bank account at 14 financial institutions for as little as $4 a month, with 50% more debit transactions included as part of the fee.

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Free accounts should be available to students, Canadians aged 18 and under, beneficiaries of registered disability savings plans and seniors receiving the Guaranteed Income Supplement, while other groups may also qualify. Newcomers have access to a free account for the first year.

The government has also begun discussions on increasing deposit insurance to $150,000, up from $100,000, but has not yet formally implemented the change.

Artificial intelligence

AI has popped up everywhere this year, for better or for worse. At the market level, it has raised concerns about a massive speculative bubble that threatens to hit retail investors if it bursts, though so far they have largely become richer on the bet on continued AI growth.

It has also left some people with potentially unreliable financial guidance, while also opening up new avenues for people who find it difficult to talk to a human about their financial problems.

Bruce Sellery, CEO of Credit Canada, said that while AI has raised concerns about fraud and job losses, the non-profit has also seen benefits when it launched its own AI agent called Mariposa. “You can complete an entire credit counseling appointment, including a debt assessment, without speaking to a human being if you don’t want to. It’s genius,” he said by email.

Looking ahead to 2026

Among the big changes expected next year is the possibility of open banking finally taking off. The system will give Canadians more control over their financial data, including allowing them to securely manage multiple accounts in one place.

Trade issues will also continue to loom as the review of the Canada-United States-Mexico agreement approaches. Any further disruption to trade could threaten jobs in Canada, while also putting more pressure on inflation to force the Bank of Canada to raise interest rates.

As things stand now, analysts expect the central bank to start raising rates later next year or early 2027, but as Bank of Canada Governor Tiff Macklem said, the future is extremely difficult to predict these days. “Uncertainty remains high and the range of possible outcomes is greater than normal,” Macklem said at a press conference on Wednesday.