Canada just announced a tax cut and you could see more on your paycheque starting this summer

Canadians are about to see a little more money in their pockets, thanks to a new federal tax cut aimed at the middle class.

In one of its first major moves since the recent federal election, the Government of Canada just officially announced a middle-class tax cut — and this latest change to personal tax in Canada could mean hundreds of dollars in savings for millions of people.

Prime Minister Mark Carney made this cut a central promise in his campaign — and now it's one of the first things he's delivering on just a day after he and his new Cabinet were sworn in on Tuesday.

According to an announcement from the Department of Finance on Wednesday, once legislated, the lowest personal income tax rate will drop from 15% to 14%. The government projects this tax cut will come into effect as soon as July 1, 2025 — exactly halfway through the tax year.

That might not sound like a huge drop, but according to the Department of Finance Canada, it adds up to real savings. The cut could mean up to $840 in savings per year for two-income households, with the government projecting more than $27 billion in tax relief over the next five years.

This announcement came from François-Philippe Champagne, who just returned to his role as Minister of Finance and National Revenue. It's one of the very first things he's rolled out since the new Cabinet was sworn in on Tuesday, and the timing checks out — it's one of the first major moves by the new government ahead of Parliament's return on May 26.

The government says the Canada Revenue Agency will adjust payroll tax tables starting July 1, which means paycheques could start reflecting the new rate in real time. If not, folks will still see the savings when they file their 2025 taxes next spring.

Carney said the goal is to "bring down the cost of living and to put money back in their pockets," calling the tax cut a key part of that plan. Champagne added that it's about helping Canadians "get ahead financially" — and, of course, setting the stage for growth.

Source: MSN Money / Narcity