For the 2025 tax year, the lowest federal income tax rate is legally set at a blended 14.5%, not 14%, even if the majority of income is earned after July 1, 2025, when the rate dropped from 15% to 14%. This 14.5% rate is calculated automatically by tax software, including TurboTax Canada.
- The 1% reduction applies only to the second half of the year, making the average (blended) rate for the entire year 14.5% (15% for January–June, 14% for July–December).
- The 14% rate takes full effect for the 2026 tax year.
- No, you cannot pick the 14% rate in your 2025 return, as the blended 14.5% rate is mandatory to account for the first half of the year.
- Continue using TurboTax as normal; it will properly calculate the 14.5% rate on the first $57,375 of taxable income for the 2025 tax year.
The 14% rate applies to the 2026 taxation year, which you will file in 2027
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