Average family to save $280 per year from Liberal tax cut: PBO

On a per-person basis, the average tax filer is estimated to save $90 on their 2025 income taxes. Photo by POSTMEDIA File

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OTTAWA — The average Canadian family will save $280 on their taxes next year from the Liberal government’s planned income tax cut, the parliamentary budget officer said in an analysis released on Wednesday.

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But some seniors and single Canadians are expected to save less, prompting criticism from Conservatives who argue the tax cut doesn’t go far enough.

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The Liberal proposal would drop the tax rate to 14.5 per cent from 15 per cent on the first $57,375 of Canadians’ taxable income this year, and down to 14 per cent next year. The promise was a pillar of the Liberal campaign during the spring federal election.

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At the time, Prime Minister Mark Carney‘s plan pitched annual savings of up to $825 per dual-income family. When the legislation was tabled through a ways and means motion late last month, Finance Canada projected maximum tax savings of $840 per couple.

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Yves Giroux, the parliamentary budget officer, said Wednesday that the average family likely won’t get that much back.

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On a per-person basis, the average tax filer is estimated to save $90 on their 2025 income taxes because the tax cut only takes effect on July 1. That PBO expects that average will rise to $190 in savings next year.

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The PBO says a two-income couple in the second income bracket with a child would be expected to get the most back — $750 in average savings next year.

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For the average high-earning single Canadian with no children in the top tax bracket, the PBO said the typical savings would be roughly $350 annually.

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On the other end of the spectrum, a single senior in the first income bracket would get an average of $50 back next year. A single parent in the same tax bracket would save an average of $140.

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The PBO noted that the lower an individual’s average income is, the less they can expect to save from a reduction in the first income tax bracket on a relative basis. Many low-income individuals also have existing tax credits to reduce their taxable income.

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The Conservative party said in a media statement Wednesday that the tax savings on a monthly basis wouldn’t allow a low-income senior to buy a breakfast sandwich.

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The Official Opposition accused Carney of tinkering “on the margins to save Canadians mere cents a day.”

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The Conservatives promised a steeper income tax cut of 2.25 percentage points during the election campaign, though that plan would have phased the reduction in over four years.

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The Canadian Press reached out to Finance Minister Francois-Philippe Champagne for comment but has not yet received a response.

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The PBO priced the cost of the Liberal tax cut at nearly $64 billion over five years, though the net cost would be closer to $28 billion after taking into account associated reductions in federal tax credits under the plan. Finance Canada costed tax savings at around $27 billion over five years.

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The Liberals tabled a ways and means motion last month that puts the tax cut in place starting July 1, but legislation to enact the change is still making its way through Parliament.

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