New and increasing taxes and other tax changes Albertans can expect in 2025

Albertans face new and increasing taxes in the new year, with some tax breaks wrapping up or postponed.

Here are some of the changes to expect in 2025:

Vaping tax

A provincial vaping tax will be applied to products starting Jan. 1, in addition to the existing federal tax.

The tax is expected to bring in $18 million in 2025-26.

According to Action on Smoking and Health (ASH) Canada, it will result in people paying roughly 20 per cent more for their vaping products when matched with the federal tax.

Les Hagen, executive director at ASH, believes the tax will help reduce vaping rates among youth in Alberta.

"We know with tobacco products that tobacco tax and price increases are one of the single most effective ways to reduce tobacco use, particularly among youth, because they have limited disposable income," he said.

"So, we anticipate the same impact with vaping, and there is evidence showing that these vaping taxes are having the desired effect."

ASH continues to call on Ottawa to implement a flavour ban on vaping products.

Electric vehicle tax

Electric vehicle (EV) owners are expected to pay a $200 provincial tax starting when owners register their vehicles in 2025, though a timeline has yet to be released.

On Tuesday, the Finance Ministry said it won't take effect Jan. 1 but will be implemented in "early 2025."

The provincial government's budget, released last February, states EVs "cause more wear and tear on provincial roadways while their owners pay no fuel tax."

The new tax won't apply to hybrid vehicles.

The Electric Vehicle Association of Alberta (EVAA) takes issue with the claim EVs cause more damage.

"The flat fee is punitive to small EV drivers or low mileage. There are many EVs, if not the majority, that weigh less than gas vehicles," said EVAA president William York.

"The tax is being introduced at a time when other jurisdictions are introducing incentives for people to buy electric vehicles. The EVAA does not disagree that there is a revenue shortfall and imbalance when it comes to the revenues generated through fuel taxes and that is not recognized when someone charges their electric vehicle at home, but this is ill-timed and appears to be motivated by ideology rather than the province's stated reason of 'fairness.'"

The tax is expected to generate $5 million in 2025-26 and $8 million in 2026-27.

Alcohol tax

Federal alcohol taxes will increase by two per cent on April 1.

Since 2023, the government has reduced the automatic increase on the excise taxes on beer, wine and spirits with inflation.

The Canadian Taxpayers Federation estimates the alcohol hike will cost taxpayers $40.8 million.

Carbon tax

Beginning on April 1, the federal government will increase the price on carbon pollution by $15 per tonne, continuing with its plan to increase it each year until 2030.

Kris Sims, Alberta director for the Canadian Taxpayers Federation, says drivers can expect to pay 20 cents extra per litre of gasoline and 25 cents more per litre of diesel.

"So, if you’re filling up a minivan, that's going to cost you around 15 bucks extra, just in the carbon tax. If you're filling up a pickup truck, that's going to cost you close to $25 just in the carbon tax every time you're filling that thing up," she said.

"Even if you don't drive, this also affects you because typically the carbon tax applies to home heating, so here in Alberta the vast majority of us—it's over 90 per cent of households—use natural gas, and the carbon tax is going up there too."

In October, Premier Danielle Smith announced the province applied for a judicial review to be exempted from Ottawa's federal carbon tax, calling the tax "unconstitutional and unlawful."

The federal Justice Ministry anticipated the legal challenge would take 12 months.

GST holiday tax

The temporary two-month GST holiday tax break implemented by the federal government will come to an end Feb. 15.

The reduction was on certain items like children's groceries, drinks and some groceries.

The federal government announced the plan to temporarily waive the five per cent goods and services tax in a bid to help ease affordability concerns during the holiday season.

Income tax cut

The provincial government's promised income tax break was postponed from taking effect in 2025 and is expected to come into effect in 2026 and 2027.

According to the 2024 budget, the new tax bracket on the first $60,000 of income is estimated to save Albertans a maximum of $760 a year.

In a televised address, the premier announced a delay in the campaign promise, citing a need to cut spending.

The new tax cut—nine per cent in 2026 and eight per cent in 2027—is expected to cost the government $1.4 billion annually.