Canadian Families Spent More on Taxes Than Basic Needs in 2025, Study Finds

Shoppers push carts down an aisle at a grocery store in Hamilton, Ont., on Feb. 2, 2025. Carlos Osorio/Reuters

Canadians’ tax payments last year were higher than their total spending on housing, food, and clothing combined, a new study suggests.

Canadians dedicate roughly 42 percent of their income to taxes and approximately 36 percent goes to pay for essential needs such as food, housing, and clothing, according to the latest report from the Fraser Institute.

“At a time when the cost of living is top of mind across the country, taxes remain the largest household expense for Canadian families,” Fraser Institute director of fiscal studies Jake Fuss said in an Aug. 13 press release.

“While Canadians can decide for themselves whether or not they get good value for their tax dollars, they should understand how much they pay in taxes each year and how much the tax burden has grown relative to other necessary costs they must pay.”

The report, authored by Fuss and Fraser Institute senior policy analyst Grady Munro, compared 2025 figures with those from 1961, finding that tax increases have significantly outpaced increases in any other individual expense for the typical family.

The average income in 2025 was $121,111, with a tax bill of $50,721, while the average income recorded in 1961 stood at $5,000, with a corresponding total tax bill of $1,675. Including all types of taxes, that bill has increased by 2,928 percent since 1961.

The 1961 numbers also indicate that 33.5 percent of the average Canadian income was dedicated to taxes, while 56.5 percent was reserved for essential needs.

The increase in the tax bill over the past six decades has also dramatically outpaced the 946 percent increase in the Consumer Price Index, the study said. This index reflects the average costs incurred by consumers for essentials such as food, housing, clothing, transportation, health and personal care, education, and various other goods and services.

The average Canadian family has seen a 2,349 percent increase in shelter costs, a 952 percent rise in food expenses, and a 526 percent increase in clothing expenditures from 1961 to 2025.

The authors noted that when current combined federal and provincial deficits are included, the tax burden on the average Canadian family would have increased by 3,243 percent since 1961.

Tax Payments

The predominant share of Canadians’ tax contributions is directed toward income taxes, the study found. A typical family with an income of $121,111 would pay approximately 32 percent of their earnings—amounting to $16,085—in income tax.

Another 22 percent amounting to $11,312 would be earmarked for payroll and health taxes, and 13.7 percent or $6,972 would go towards sales tax.

Investment and other profit taxes account for 14.2 percen,t or $7,182, property taxes make up 8.5 percent, or $4,307, while fuel and carbon taxes represent 1.5 percent, totalling $763. Natural resource taxes, import duties, and other taxes made up the remaining 4.8 percent.

The report further indicated that average Canadians bear the burden of business taxes, because although these taxes are paid directly by businesses, the expenses are ultimately transferred to consumers.