Tax season is here, and if you’re filing your 2025 return in 2026, there are some significant changes you need to understand. From a lower federal tax rate to new CRA security requirements and a rebranded benefit program, this year’s filing season looks different from anything we’ve seen before.
At UBM Tax Associates, our founder Braham Merchea — a former Canada Revenue Agency senior tax auditor with over 25 years of experience — has reviewed every change that affects individual and business filers in Ottawa and across Canada. Here is what matters most for your 2025 tax return.
The New 14% Federal Tax Rate: More Money in Your Pocket
One of the most impactful changes for the 2025 tax year is the reduction of the lowest federal income tax bracket from 15% to 14%. This applies to the first $58,523 of taxable income and took effect on July 1, 2025.
What does this mean in real dollars? Individual taxpayers can save up to $420 per year, and two-income households could see savings of up to $840 combined. Since the change took effect mid-year, your 2025 return will use a blended rate, but the full savings kick in for the 2026 tax year onward.
The complete 2026 Canadian income tax bracket breakdown is worth reviewing to understand exactly where your income falls and how the indexed brackets affect you.
Updated 2026 Federal Tax Brackets
| Taxable Income | 2026 Federal Rate |
|---|---|
| $0 – $58,523 | 14% |
| $58,524 – $117,045 | 20.5% |
| $117,046 – $181,440 | 26% |
| $181,441 – $258,482 | 29% |
| Over $258,482 | 33% |
All brackets have been indexed upward by 2% for 2026, meaning more of your income is taxed at the lower rates compared to previous years.
Capital Gains Inclusion Rate: What Actually Happened
There was significant uncertainty throughout 2024 and early 2025 about a proposed increase to the capital gains inclusion rate from 50% to 66.7% on gains above $250,000. After months of debate, Prime Minister Mark Carney officially cancelled the increase on March 21, 2025.
This means the inclusion rate remains at 50% for all taxpayers. However, two related changes did proceed:
- The Lifetime Capital Gains Exemption increased to $1,250,000 for qualifying small business shares and farm or fishing property
- The new Canadian Entrepreneurs’ Incentive provides a reduced 1/3 inclusion rate on the first $2 million in eligible capital gains over a lifetime, benefiting qualifying business owners who sell their companies
If you sold investments, property, or a business in 2025, speak with a qualified tax accountant in Ottawa to ensure you’re calculating your capital gains correctly.
CRA Goes Digital-First: No More Paper Tax Packages
Starting with the 2026 filing season, the CRA is no longer mailing paper tax packages to Canadians. This is part of a broader digital-first initiative that has been building for several years.
Here is what you need to know:
- NETFILE opens February 23, 2026 — this is when online filing officially begins
- SimpleFile service expands on March 9, with a new eligibility questionnaire to check if you qualify for simplified filing
- You can still request paper forms by calling 1-855-330-3305 or visiting a CRA tax centre, but online filing is now the default
- CRA drop boxes across Canada are permanently closing on May 29, 2026, as usage has declined by 78%
If you or a family member has been relying on paper filing, now is the time to set up CRA My Account or work with a professional tax preparer who can file electronically on your behalf.
Mandatory Multi-Factor Authentication for CRA My Account
Beginning February 2026, all CRA My Account users must set up backup multi-factor authentication. You will need either a passcode grid or a third-party authenticator app in addition to your existing login credentials.
This change is a response to increasing fraud attempts targeting CRA accounts. If you haven’t already set up MFA, you will be prompted to do so the next time you log in. The CRA has also introduced online self-service credential recovery, so forgotten passwords no longer require a phone call.
We recommend setting up your MFA before the April 30 filing deadline rush to avoid delays when you need to access your account.
Canada Groceries and Essentials Benefit Replaces the GST/HST Credit
The GST/HST credit has been renamed and enhanced. Starting in 2026, it becomes the Canada Groceries and Essentials Benefit (CGEB), which includes:
- A one-time top-up payment in spring 2026 (no later than June)
- A permanent 25% increase to quarterly payments beginning July 2026 for five years
- Quarterly payments continue in July, October, January, and April
To give you an idea of the impact:
| Household Type | Approximate Annual CGEB |
|---|---|
| Single senior ($25,000 income) | $950/year (includes $267 one-time top-up) |
| Family of 4 ($40,000 income) | $1,890/year (includes $533 one-time top-up) |
Approximately 12 million Canadians are eligible. The benefit is automatically calculated when you file your 2025 return — which is one more reason not to delay your filing.
Key Filing Deadlines for 2026
| Date | Deadline |
|---|---|
| February 23, 2026 | NETFILE opens for electronic filing |
| March 2, 2026 | RRSP contribution deadline for 2025 tax year |
| March 9, 2026 | SimpleFile service opens |
| April 30, 2026 | Individual T1 filing and payment deadline |
| May 29, 2026 | CRA drop boxes permanently close |
| June 15, 2026 | Self-employed filing deadline (taxes still due April 30) |
How UBM Tax Associates Helps Ottawa Taxpayers Navigate These Changes
With over 25 years of experience in Canadian taxation and a background as a former CRA senior tax auditor, Braham Merchea and the team at UBM Tax Associates understand these changes inside and out. We don’t just file returns — we ensure every eligible deduction and credit is applied correctly, so you keep more of what you earn.
Whether you need help with personal tax preparation, business consulting, or understanding how these 2026 changes affect your specific situation, we are here to help.
Ready to file with confidence? Contact UBM Tax Associates today to book your tax preparation appointment before the April 30 deadline.
UBM Tax Associates is located at 170 Harbour View Street, Ottawa, ON K2G 7B4. Call us at (613) 843-0757 or (613) 859-3762.
