The Quebec government announces some tax changes in its economic and financial update presented Thursday. What is changing?
65 years old for the tax credit for career extension
From 2025, the government will increase the age of eligibility for the tax credit for career extension from 60 to 65 years. The age has been set at 60 since 2019, but at this age, the incentive would no longer be necessary as it was in the past, believes Quebec.
The government will tighten other parameters of the tax credit, in particular so that it benefits those who have significant work income, and more those who work only a few weeks per year. Furthermore, Quebec will no longer take into account only work income but net income from now on, so as to exclude better-off taxpayers who have access to generous retirement benefits.
Access to the tax credit will be more restrictive, but the maximum tax savings offered by the tax credit will increase, from $1,540 to $1,750, an increase of $210.
Thanks to these changes, Quebec plans to save $887 million over four years, starting next year. Nearly 200,000 taxpayers will lose access to the tax credit.
Indexation of 2.85% of the tax system
As it does every year, the government indexes the parameters of the tax system and social assistance programs. As of 1is Next January, the indexation rate will be 2.85%, which will lead to an increase in the value of several tax credits and deductions.
In particular, the basic personal amount — the threshold below which a taxpayer is not taxed — will increase from $18,056 to $18,576.
Also, the maximum amount of the family allowance will increase from $2,923 to $3,006, an increase of $83.
The basic annual benefit for a social assistance recipient will increase from $9,144 to $9,408, an increase of $264.
Indexing the tax system will cost the government nearly $1.2 billion next year.
Capital gain inclusion
This is not new: Quebec announced earlier this year that it was harmonizing with Ottawa on tax changes to the capital gains inclusion rate.
But the government is now estimating the additional revenue that this measure should generate, i.e. nearly $2.5 billion over five years.
As a reminder, since June 25, 2024, the capital gains inclusion rate has increased from 50% to 66.7% for the portion of capital gains that exceeds $250,000 in a year per individual..
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