Starting July 1, 2025, millions of Canadians will see a reduction in their federal income tax as the government lowers the lowest tax bracket rate from 15% to 14%. This cut applies to the first $57,375 of taxable income and is expected to benefit around 22 million middle-income earners across the country. For individuals, the change could mean savings of up to $420 annually, while dual-income households may save up to $840. Because the new rate comes into effect mid-year, the average tax rate for 2025 will be approximately 14.5%, with the full 14% rate applying in 2026 and beyond. Canadians will begin to notice the impact directly on their paycheques starting in July, as the Canada Revenue Agency updates its withholding calculations to reflect the change. Over the next five years, the government estimates this tax cut will return roughly $27 billion to Canadians, offering some relief amid ongoing cost-of-living pressures.