The federal government’s legislation reducing the lowest personal income tax rate to 14 percent will save the average taxpayer $190 annually from 2026 to 2028, according to the Parliamentary Budget Office (PBO).
The Liberal government recently introduced legislation providing an income tax cut for Canadians, saying it would save a two-income family up to $840 a year starting next year. The lowest tax rate will be reduced from 15 percent to 14 percent.
The PBO report said that couples with children in the second tax bracket could save up to $750 in 2026. Overall, the report said “census families” would save $280 per year that year.
The PBO expects the average Canadian taxpayer will save $90 in 2025, $190 in the three years following, and $200 in 2029. The report noted that savings were lower in 2025 because the government will first lower the tax rate to 14.5 percent in 2025, before dropping it to 14 percent the year after.
While the Liberal government estimated that the tax cut would cost $27 billion in revenue to implement over five years, the PBO report said it would cost $28.2 billion.
The PBO report said that while higher earners would see greater savings in taxes through the plan, those savings would make up a smaller share of their income.
When Finance Minister François-Philippe Champagne introduced a ways and means motion to reduce income taxes on May 27, he said the Liberal government was “setting the stage for economic growth by helping hard-working Canadians keep more of their paycheques to spend on the priorities that matter most to them.”
In a statement, the Opposition Conservatives said the Liberal government had “failed to deliver” on a meaningful tax cut for Canadians, saying the average Canadian would only save $90 this year.
“That is $15.83 per month, or about four cans of tuna,” the party said in a statement.
The party also highlighted that according to the PBO, a senior in the lowest income bracket would only save $50 in taxes in 2026, which averages to around $4.16 per day.
When Conservative Leader Pierre Poilievre was asked on May 28 whether the party would vote in favour of tax cuts, he responded, “The question we always ask is, ‘Is the proposal better than the status quo?’”
“If it is, then we support it. If it’s not, then we oppose it,” he said.
