People with disabilities concerned proposed Liberal bill will increase federal taxes

HALIFAX — Advocacy groups are asking the federal Liberal government to adjust its proposed tax bill to ensure people with disabilities don’t end up paying more to the Canada Revenue Agency.

Inclusion Canada says it favours Ottawa lowering the lowest marginal tax rate from 15 to 14 per cent, as proposed in the bill that passed first reading earlier this month.

However, the group says the unintended result of the change is that tax credits for people with disabilities will decrease in many cases.

That’s because the credit — used to reduce taxes payable — is generated by a formula that is tied to the marginal tax rate, and by dropping that rate to 14 per cent, the credit shrinks.

Krista Carr, the CEO of Inclusion Canada, said in a telephone interview Monday “we’re really hoping this is something that will be remedied, but as of yet we’ve not had a response.”

The lobby group says without this change, many lower income people with disabilities who rely on the tax credit will be paying about $100 a year more to Ottawa.

The March of Dimes, an organization that also works on behalf of people with disabilities, says in a release that families with children with disabilities would lose an average of about $156 per child.

The federal Finance Department didn’t immediately provide a comment on the groups’ request for the change to the bill.

The Liberals have said reducing the marginal tax rate will save two-income families up to $840 a year in 2026. Ottawa has also noted that beginning in July eligible Canadians can receive up to $2,400 a year from the Canada Disability Benefit.

Carr said people with disabilities will lose money in the tax credits “that are fundamentally important to them as it helps offset the expenses related to disabilities.”

She argues the simple fix is to amend the bill to keep the marginal tax credit rate at 15 per cent, “just for the calculation of these particular tax credits.”

Carr also said tax credits on medical expenses will also be affected, and that could further add to the tax bill for people with disabilities.

Nicholas Taylor, a resident of Cooks Brook, N.S., said in an interview Tuesday that the extra $100 in taxes would be roughly equivalent to a month of medication costs.

The 39-year-old has polyneuropathy — a condition that where peripheral nerves in the body are damaged — which limits Taylor’s mobility and requires the use of a wheelchair.

“For myself, that’s a month’s worth of medication. I’m diabetic and the blood strips that I have to purchase, they’re also about $100 for a package,” Taylor said.

With tax payments annually of about $450 on $12,000 in income, Taylor estimates the extra $100 the changes may cost him represents a 25 per cent tax increase.

“We need people with disabilities to be consulted before policies like this are brought in,” Taylor added.

This report by The Canadian Press was first published June 19, 2025.

Michael Tutton, The Canadian Press