Notably, NS Budget 2025 introduces a $200 million contingency amount per year into the projected deficits. The contingency amounts are intended to account for unexpected changes in expenses or revenues, such as the proposed tariffs from the United States.
In addition, NS Budget 2025 introduces several measures aimed at making life more affordable for Nova Scotians. These measures include reducing the small business corporate tax rate, increasing personal tax credits for individuals with taxable income over $25,000, and lowering the provincial portion of the Harmonized Sales Tax (HST).
NS Budget 2025 projects a surplus of $82.4 million for the 2024-25 fiscal year, compared to a $467.4 million deficit projected in the previous budget.
Fiscal projections for the next four years are as follows:
| Year | Projected surplus / (deficit) excluding contingency | Projected surplus/(deficit) including contingency |
|---|---|---|
|
2025-26
|
($697.5 million)
|
($897.5 million)
|
|
2026-27
|
($522.5 million)
|
($722.5 million)
|
|
2027-28
|
($108.0 million)
|
($308.0 million)
|
|
2028-29
|
$8.6 million
|
($191.4 million)
|
The small business tax rate will be reduced to 1.5% (from 2.5%). In addition, the small business threshold will be increased to $700,000 (from $500,000). These changes will take effect on April 1, 2025.
Combined federal and provincial corporate tax rates
| Current | Proposed effective April 1, 2025 | |||
|---|---|---|---|---|
|
Corporate Tax Rates
|
NS only
|
Federal and NS
|
NS only
|
Federal and NS
|
|
Small business (up to $500k active business income)
|
2.5%
|
11.5%
|
1.5%
|
10.5%
|
|
Small business (up to $500k - $700k active business income)
|
14%
|
29%
|
1.5%
|
16.5%
|
|
General corporate
|
14%
|
29%
|
14%
|
29%
|
|
Manufacturing and processing
|
14%
|
29%
|
14%
|
29%
|
NS Budget 2025 doesn’t change the personal tax rates. However, starting in 2025 the personal income tax brackets and certain non-refundable tax credits are subject to an annual indexing for inflation, as introduced in NS Budget 2024.
The personal tax brackets and the respective marginal tax rates for 2025 as follows:
| Tax brackets | Federal and NS marginal tax rates |
|---|---|
|
$ 30,507 or less |
23.79% |
|
$ 30,508 - $57,375 |
30.48% |
|
$ 57,376 - $61,015 |
35.98% |
|
$ 61,016 - $74,999 |
37.70% |
|
$ 75,000 - $95,883 |
37.17% |
|
$ 95,884 - $114,750 |
38.00% |
|
$114,751 - $154,650 |
43.50% |
|
$154,651 - $177,882 |
47.00% |
|
$177,883 – $253,414 |
50.00% |
|
Over $253,414 |
54.00% |
The top combined federal and provincial marginal tax rates for 2025 are as follows:
| Taxable income | 2025 |
|---|---|
|
Salary/interest income
|
54.00%
|
|
Capital gains
|
27.00%
|
|
Eligible dividends
|
41.58%
|
|
Non-eligible dividends
|
48.28%
|
NS Budget 2025 increases the availability of certain personal tax credits, such as the basic personal amount. Currently these credits are reduced for taxpayers with taxable income over $25,000. Single taxpayers with taxable income above $25,000 will save up to $260 per year in provincial tax, depending on their income-level. Taxpayers who claim the spousal amount, eligible dependent, or age amount will see additional tax reductions.
The provincial portion of the HST will be reduced to 9% (from 10%). The HST rate will be composed of a 5% federal component and a 9% provincial component. This change takes effect on April 1, 2025.
Have questions? Let’s talk. Contact your local advisor or reach out to us here.
Visit our Budget 2024 hub to learn more about all federal and provincial budgets.
Disclaimer
The information contained herein is general in nature and is based on proposals that are subject to change. It is not, and should not be construed as, accounting, legal or tax advice or an opinion provided by Doane Grant Thornton LLP to the reader. This material may not be applicable to, or suitable for, specific circumstances or needs and may require consideration of other factors not described herein.
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