Tax Highlights from the 2025 Nova Scotia Budget

Highlights from the Nova Scotia Budget

Minister of Finance John Lohr tabled the 2025/26 Nova Scotia provincial budget on February 18, 2025.

The budget projects a deficit of $697.5 million for the upcoming 2025/26 fiscal year, followed by smaller deficits in the next two fiscal years, before returning to a budgetary surplus of $8.6 million by 2028/29. The forecast surplus for the nearly completed 2024/25 fiscal year now stands at $82.4 million, compared to the previously projected deficit of $467.4 million.

The province’s net debt is expected to increase to $22.4 billion for the 2025/26 fiscal year, up from $19.7 billion for 2024/25. This increase reflects investments from the 2025/26 capital plan and the anticipated budget deficit.

On the income tax front, the budget proposes reducing the small business tax rate by 1% and increasing the small business limit from $500,000 to $700,000. In addition to the corporate tax reduction, the budget introduces an increase to certain personal tax credits, a reduction of the harmonized sales tax rate, and the elimination of tolls on the Halifax-Dartmouth bridges.

The following pages summarize the changes announced in the budget. Please note that these changes remain proposals until they are passed into law by the provincial government.

Personal Tax Matters

Personal income tax rates and tax brackets

There are no proposed changes to personal income tax rates. However, tax brackets and other amounts have been indexed by 3.1% to account for inflation. The table below outlines Nova Scotia’s tax rates and brackets for 2025.

The table below outlines the highest combined federal and provincial marginal tax rates for various types of income in 2025.

Enhancements to the Basic Personal Amount, Age Amount, Spousal Amount, and the Eligible Dependant Amount

Effective for the 2025 tax year, the maximum Basic Personal Amount, Age Amount, Spousal Amount, and Eligible Dependant Amount will be available to all eligible tax filers. This change removes the reduction provision that previously applied toindividuals with taxable income above $25,000.

• The Basic Personal Amount will be $11,744 for all tax filers.
• The Age Amount will increase to $5,734.
• The Spousal Amount and the Eligible Dependant Amount will be $11,744.

Corporate Tax Matters

Corporate income tax rates

The budget proposes a 1% reduction to the small business tax rate and an increase in the small business limit from $500,000 to $700,000, effective April 1, 2025. The table below outlines the Nova Scotia tax rates and small business limit, effective after April 1, 2025.

The table below outlines the combined federal and provincial corporate income tax rates for various types of income earned by a Canadian Controlled Private Corporation (CCPC), effective after April 1, 2025.

Small Business Tax Rate reduction and threshold increase

Effective April 1, 2025, the small business tax rate will be reduced from 2.5% to 1.5%, and the small business tax rate threshold will increase from $500,000 to $700,000.

Other Initiatives

Harmonized Sales Tax (HST) reduction

Effective April 1, 2025, the provincial portion of HST will be reduced from 10% to 9%, lowering the overall HST rate from 15% to 14%.

Non-Resident Deed Transfer Tax increase

The Non-Resident Deed Transfer Tax rate will increase from 5% to 10%. The higher tax rate will apply to transactions with an Agreement of Purchase and Sale dated April 1, 2025 or later.

Elimination of tolls on Halifax-Dartmouth bridges

Tolls on the Halifax Dartmouth bridges will be eliminated effective April 1, 2025.

We Can Help

Your financial advisor can help you assess the impact of these proposals on your personal finances or business affairs and show you ways to take advantage of their benefits or ease their impact.

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