Budget 2025: What Matters for Families, Business Owners, and Portfolios

Team Innova – Here’s a Quick Debrief on the Federal Budget Tabled November 4, 2025.

Big Picture

• This budget shifts the focus from day-to-day program spend toward “generational” capital investments (infrastructure, productivity, housing, defense), while shrinking the public service by ~10% (largely via attrition/early retirement). 
• Deficits remain sizable near-term (projected $78B, ~2.5% of GDP in FY 2025/26) but not as staggering as they are expected to be in the U.S. at 5.8% of GDP for 2025.
• This pushes aggregate Federal debt-to-GDP to 42% near term, below the pandemic peaks of 47%, but well-above pre-COVID levels of 31%.  For reference, the U.S. is at 99% debt-to-GDP and projected to grow to 106% by 2030.
• Renewed promise to reach balanced operating budget by 2029, but these are based on lofty expectations on trade and the economy.

Measures Most Likely to Directly Affect our Clients

• Middle-income tax cut: lowest bracket stepping down to 14% in 2026 (from 15%). Estimated annual savings ~$420 per individual / ~$840 per couple. 
• The lower first bracket improves after-tax cash flow at the margin; we’ll update RRIF withdrawal and pension-splitting models to reflect bracket changes and inflation indexing. 
• The elimination of the federal fuel charge that came into effect in April 2025 will also bring an end to the Canada Carbon Rebate after 2026.

Measures That May Affect a Small Portion of our Clients

• Bare trust filing requirements deferred further to 2027
• 21-year trust rule has been strengthened reducing the ability to side-step the deemed disposition rules
• Elimination of the underused housing tax (UHT)
• PSW tax credit introduced as well as early retirement options for frontline public servants with 25+ years of service
• Elimination of GST for first-time home buyers increased to $1.5m homes

Measures That Will Impact the Economy and Housing

• Infrastructure & housing: new and re-profiled funding (ports/rail, local infrastructure; Build Canada Homes agency) intended to accelerate approvals and supply. 
• Spending restraint: comprehensive expenditure review targeting ~$60B in savings over four years, slower growth in direct program spending (<1% p.a.), and civil-service “right-sizing” (~40k positions by FY 28/29). 
• Immigration mix: modestly lower permanent-resident targets and sharper reductions in new temporary residents over 2026-28; skills recruitment programs continue. Housing/labour impacts will be watched. 
• Productivity “Super-Deduction”: faster write-offs / immediate expensing for eligible business investment to stimulate economic activity and large-scale spending on productivity enhancing capital expenditures.
• Defense & security build-out: multi-year ramp with $80B+ over five years across personnel, infrastructure, cyber and kit, on a path to NATO targets. Tailwinds for select Canadian industrials and supply-chain adjacencies. 

How This Will Impact Your Portfolio

• Could prove beneficial for the markets, especially if businesses are willing to invest in capital expenditures despite the ongoing trade tensions.
• No obvious near-term relief on headline deficits; we remain selective on duration and credit and continue to emphasize diversified, pension-style exposures (core equity, real assets, private credit) to balance growth and drawdown risk, rather than using conventional bonds as the portfolio ballast.
• Supportive for the $CAD given a Policy mix (productivity push + infrastructure) if business investment responds.

As always, the goal isn’t to react to headlines, it’s to prepare. We’ll fold the budget changes into your plan, and keep portfolios aligned with your required return and risk guardrails.

If you have any questions as to how this budget might affect you personally, please reach out to your Innova advisor who can discuss the intricacies of your situation and any impact this may have on your financial future.

Thank you for the opportunity to continue to be of service to you.

Sources: Budget Canada, Mackenzie Investments, Independent Research 

This publication is for informational purposes only and shall not be construed to constitute any form of advice. The views expressed are those of the author alone. Opinions expressed are as of the date of this publication and are subject to change without notice and information has been compiled from sources believed to be reliable. This publication has been prepared for general circulation and without regard to the individual financial circumstances and objectives of persons who receive it. You should not act or rely on the information without seeking the advice of the appropriate professional.