Federal and Provincial Tax Rate Changes
19 August 2025
Personal Income Tax Reduction - New Legislation
Effective July 1, 2025, new legislation came into effect that introduces reductions to federal and provincial tax rates that may positively impact you. What the new legislation covers:
- Federal tax rate on the first $57,375 of income is reduced from 15% to 14%
- Alberta tax rate on the first $60,000 is reduced from 10% to 8%
- As these changes were implemented mid-year, the tax savings will be pro-rated across the 2025 calendar year.
- These adjustments are designed to increase your net pay beginning with the September pay periods.
Frequently Asked Questions
When and why were these tax changes introduced ?
The tax changes were passed as part of Bill C-4: Making Life More Affordable for Canadians Act, receiving Royal Assent in late June 2025. The CRA and Government of Alberta published updated tax withholding tables for employers effective July 1, 2025.
You said the new tax reductions came into effect on July 1. Why haven’t I seen the new tax rate on my paycheque?
Although the change took effect on July 1, 2025, many employers, including the university, had to wait to receive the Oracle delivered tax update and are in the process of implementing it in our enterprise system PeopleSoft. The reduced tax rate will be reflected beginning with the first semi-monthly and monthly payroll in September, and will continue on a go-forward basis.
How can I view the tax rate changes?
Sign into BearTracks. Select View My Paycheque. Open your September statement. You can review the tax deduction on your paycheque under the “Taxes” section on the CIT (Canadian Income Tax) line
Will the tax reduction change my net (take home) pay and by how much?
This depends on a number of factors including your individual circumstances. This includes factors such as your income level, TD1 exemptions claimed, pre tax deductions (such as pension) etc. On average it is estimated that two-income families could save up to $840.
If the tax update is not applied until September and it is effective from July 1, does this mean I will not see the benefit of the tax reduction for July and August?
Any tax update applied is always on a go-forward basis. For July and August, any benefit you may not have received will be taken into account when you file your personal income tax return in spring 2026.
Do I need to fill out a new TD1 tax form?
No, not unless the following applies to you:
- you have had a change in personal tax credits (e.g., dependents, tuition, disability claims)
- you want to request additional withholding or adjustments
To update your TD1, please complete the form and submit it to the Staff Service Centre.
Will this affect my year end tax slip (T4)?
There is no impact to your T4. Reduced tax rates lower the income tax deducted on your actual income. YourT4 will show accurate year-end totals for earnings and taxes.
What if I have multiple jobs or other income sources?
You may want to adjust tax withholding on your primary job to avoid under-deduction and can use the CRA Payroll Deductions Calculator to determine if an adjustment is required. It is always suggested that you speak with your personal tax advisor to seek guidance on your particular situation if you are unsure.
Who can I contact if I still have questions? Contact the Staff Service Centre or call 780-492-8000.