Canadians can expect to pay more taxes next year: Taxpayers group

Get ready to pay more. The Canadian Taxpayers Federation’s annual report on New Year’s tax changes reveals that Canadians can expect higher tax bills in the coming year.

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Get ready to pay more. The Canadian Taxpayers Federation’s annual report on New Year’s tax changes reveals that Canadians can expect higher tax bills in the coming year.

While the Carney government cut the lowest income tax rate from 15 to 14 per cent earlier this year, the average taxpayer will only save about $190 next year, according to the Parliamentary Budget Officer (PBO).

A study published earlier this year by the Fraser Institute found the average Canadian family lost 42.3 per cent of their income to taxes, costing them more than housing, food and clothing combined (35.5 per cent).

For example, a typical family earning $114,289 in 2024 paid $48,306 in taxes to all levels of government in 2025.

“There’s some good news and bad news for taxpayers in 2026,” said CTF federal director Franco Terrazzano. “The federal government cut income taxes, but it’s hiking payroll taxes. The government cancelled the consumer carbon tax, but it’s hammering Canadian businesses with a higher industrial carbon tax.”

According to the report, Ottawa will increase the maximum mandatory Canada Pension Plan (CPP) and Employment Insurance (EI) contributions for payroll taxes in 2026, meaning an additional $262 next year for each worker.

For employees making $85,000 or more, federal payroll taxes (CPP and EI) will cost $5,770 in 2025, and their employers will also be forced to pay $6,219.

Ottawa’s industrial carbon tax and its hidden carbon tax embedded in fuel regulations will not only remain in place next year but will be raised to $110 per tonne, which will then be passed onto consumers.

Alcohol taxes are also projected to increase by two per cent on April 1, 2026, costing taxpayers roughly $41 million in 2026-27.

The alcohol tax increase is automatic as it’s part of the federal government’s alcohol escalator, which increases excise taxes on beer, wine and spirits annually without a vote in Parliament.

Since its imposition in 2017, the alcohol escalator tax has cost Canadians about $1.6 billion, according to industry estimates.

“Canadians pay too much tax because the government wastes too much money. Canadians are overtaxed and need serious tax cuts to help make life more affordable and our economy more competitive,” Terrazzano said.

“Prime Minister Mark Carney needs to significantly cut spending, provide major tax relief and scrap all carbon taxes.”