Budget 2025 Puts Middle-Class Canadians Front and Centre — But the Price Tag Looms Large
Ottawa’s 2025 budget aims squarely at the middle class — the Canadians feeling the squeeze from rising rent, grocery bills, and everyday costs.
It delivers a real financial breather through tax cuts and housing incentives, but the scale of spending raises tough questions about what comes next.
The Good News: Real Relief, Right Away
The biggest headline is a one-point cut to the federal income tax rate on the lowest bracket — dropping from 15% to 14% for taxable income up to roughly $57,000. For nearly 22 million Canadians, that means more money in every paycheque. A dual-income family could see up to $840 in annual savings starting mid-2025.
Housing Help
First-time homebuyers get a major boost. The budget eliminates the 5% GST on new homes valued up to $1 million — a potential five-figure saving for young families trying to break into the market. The move is designed to open more doors, literally, for new homeowners.
Cheaper Essentials
With the federal consumer carbon price scrapped, Canadians will see immediate savings on gas and home heating. Add to that a new permanent National School Food Program, expected to save families with two children about $800 a year on groceries.
Stronger Social Programs
Key family supports remain untouched. The budget reaffirms funding for $10-a-day child care and continues the rollout of the Canadian Dental Care Plan, reinforcing Ottawa’s commitment to affordability and access.
The Uncertain Side: Housing Ambitions and Financial Risk
The budget bills its “Build Canada Homes” initiative as the most ambitious housing plan since World War II. It creates a new agency tasked with cutting red tape and nearly doubling the pace of homebuilding over the next decade. The goal: more supply and, eventually, more affordable homes.
But critics argue the plan leans heavily on long-term results. Renters, in particular, are still facing steep monthly increases — and there’s little in the budget for immediate relief. The strategy’s success will hinge on smooth coordination with provinces and how fast those promised cranes actually rise.
The Red Flag: A $78-Billion Deficit
Then there’s the elephant in the room — the deficit. Ottawa’s shortfall for 2025–26 is projected at $78.3 billion, nearly double last year’s forecast. While spending big may jumpstart growth, it also risks fueling inflation and keeping interest rates high for longer. If that happens, any savings from tax cuts or cheaper gas could vanish quickly under higher grocery and mortgage bills.
The Bottom line: Budget 2025 delivers genuine relief for middle-income Canadians and makes an aggressive push on housing. But it’s also a high-stakes bet. The government’s challenge now is to keep its promises without overheating the economy — or leaving families right back where they started.
