There is a trade-off behind the new federal government’s income tax cut...

The article explains why the federal government’s recent income tax cut is slightly less generous than it first appears. The government reduced the lowest federal tax rate from 15% to 14%. That lowers the tax charged on the first $58,523 of taxable income in 2026. However, the same lowest rate is also used to calculate many non-refundable tax credits, so reducing the rate reduces the value of those credits.

A point made by the article is that the tax cut argues that “most of the tax relief goes to people in the first two brackets”. It is important to remember that:

• First bracket: taxable income up to $58,523
• Second bracket: taxable income from $58,523 to $117,045

There is a significant difference between the first two brackets because the second one incudes people earning well above Canada’s median individual income of roughly $44,000. The report estimates that about 80% of the total tax relief goes to people in those two brackets, but that is partly because a very large share of taxpayers falls within them, not because everyone receiving the relief is low income.

Bottom line, it may not be regressive: Everyone who pays tax generally benefits, but people earning enough to use the entire first tax bracket receive a larger dollar saving than someone earning around $44,000.

This article was originally published on Noah’s substack on June 17, 2026.