This year’s federal budget promised to help Canadians deal with the affordability crisis, but much of the relief will flow toward lower-income Canadians, with less on offer for middle-class households.
Canadians with modest incomes stand to benefit the most, thanks to a 50 per cent top-up to the Canada Groceries and Essentials Benefit, expanded access to the Canada Workers Benefit and a caregiver tax credit that could pay out even to those who owe no income tax.
Ottawa also moved to make tax filing less of a headache by allowing taxpayers to claim certain deductions and credits without having to keep receipts or itemizing expenses.
“It has some good measures that are immediate and short-term and will help people who are most in need,” said Jennifer Robson, a political management professor at Carleton University in Ottawa.
“If you are a middle-income household in Toronto, it’s not that there’s nothing for you, but it’s not going to be cash in hand directly today,” Robson said.
More for lower-income Canadians
In early 2027, the federal government plans to provide a 50 per cent top-up to the Canada Groceries and Essentials Benefit (CGEB), introduced earlier this year. The supplement will bring total support for 2026–27 to as much as $1,290 for a single person without children and $2,570 for a couple with two children.
Currently, single Canadians without children can qualify for the CGEB with an annual income of up to $60,012, while the threshold for a family of four is $73,592.
The budget also proposes expanding the Canada Workers Benefit, a refundable tax credit for low-income workers, by lowering the minimum earnings required to qualify from $3,000 to $500.
The maximum annual benefit would rise by $150 to $1,859 for single workers without children and by $200 to $3,143 for families.
A cheque in the mail for some caregivers
Under current rules, Canadians caring for a family member such as a spouse or parent with a physical or mental condition can claim a tax credit, but those who owe no income tax are unable to benefit.
That could change under the budget’s proposal to make the Canada Caregiver Credit refundable, allowing eligible caregivers to receive up to $1,260 a year, even if they owe no income tax.
It will be most helpful to people in their 50s and early 60s who have stopped working to care for a sick spouse but aren’t yet eligible for retirement benefits, said David Macdonald, senior economist at the Canadian Centre for Policy Alternatives.
“Even if your income taxes are zero, you can still get it refunded,” Macdonald said. “This will actually turn into a cheque in the mail.”
Modest benefits for middle-class households
While the budget offers few new tax breaks or credits for middle-class Canadians, Robson said there are still some welcome measures.
As announced in June 2026, the federal government pledges to continue funding for the Early Learning and Child Care program, allocating up to $5.4 billion over two years.
Ottawa is extending the temporary suspension of the federal fuel excise tax, first introduced in April, until Jan. 31, 2027. The tax will then return at half its standard rate from Feb. 1 to March 31, before being fully reinstated on April 1, 2027.
Macdonald said that measure would benefit middle- and higher-income households more, as they tend to own larger vehicles and spend more on gasoline.
Simplified tax filing
Ryan Minor, director of tax at Chartered Professional Accountants of Canada, said that the federal budget is packed with small tax simplification measures that will benefit a wide range of Canadians.
“The government seems committed to making life easier, at least from a compliance perspective,” he said.
The budget recognizes that keeping track of receipts throughout the year adds to the burden of claiming tax deductions and credits, so the federal government is proposing flat-rate claims for certain deductions and credits.
Starting in 2027, Canadians who move for work or school could claim a $1,000 deduction, while people undertaking eligible home accessibility renovations could claim a flat $1,000 tax credit.
The changes would also cover certain medical expenses, including service dogs, medically necessary incontinence products and gluten free food for people with celiac disease, with the latter measure taking effect for the 2026 tax year.
The budget also proposes to raise the tax-owing threshold for instalment payments from $3,000 to $7,500 for most Canadians outside Quebec. This would allow individuals to make a single annual instalment payment instead of quarterly payments.
Big exemptions for investors
Jamie Golombek, managing director of tax and estate planning at CIBC, said the budget’s biggest changes are aimed at businesses, with new tax incentives to encourage startups and investment in small companies.
The newly introduced Canada Growth Incentive would exempt up to $15 million in capital gains from tax for eligible Canadians who acquired shares in qualifying privately held companies.
Macdonald, at the Canadian Centre for Policy Alternatives, said the government has pitched the budget as a response to affordability concerns, but its measures are largely geared toward businesses.
“This is a budget for big business,” he said. “It is masquerading as a budget for pocketbook issues.”
