Reduced RRIF minimum withdrawals
The Liberals’ primary RRIF proposal is to decrease the minimum withdrawal that is required for 2025. The party announced on April 7, 2025, its intention to “protect retirement savings by reducing the minimum amount that must be withdrawn from a Registered Retirement Income Fund (RRIF) by 25% for one year. This will allow Canadian seniors more flexibility in choosing when to draw from their retirement savings.”
This proposal was made in response to U.S. tariffs, which have created economic uncertainty and triggered stock market volatility in recent weeks. Reducing RRIF minimum withdrawals is a measure to “help Canadian seniors and retirement savings weather this storm.” The government has not yet announced when the decrease in minimum withdrawals will begin.
How RRIF minimum withdrawals work
Once a registered retirement savings plan (RRSP) is converted to a RRIF, there are minimum withdrawals that must be taken starting in the year after conversion. These minimums are calculated based on the December 31 market value of the account for the previous year. Each year, the minimum percentage rises based on the age of the account holder or their spouse. (See RRIF withdrawal rates by age.)
You can base the RRIF withdrawals on the age of your spouse if they are younger and you want to have a lower required withdrawal. If the RRIF is a non-locked-in account, so did not come from a pension transfer to a locked-in RRSP, there is no maximum or limit on your withdrawals.
The proposed 25% reduction is reminiscent of 2020 in the wake of the pandemic, when the Liberals responded to stock market volatility with a 25% decrease in required RRIF minimum withdrawals.
A lower minimum percentage means less pressure on a senior to sell stocks to fund RRIF withdrawals. Practically speaking, many seniors do not have the liberty of forgoing their minimum withdrawals and rely on their RRIF payments for spending.
RRIF withdrawals can be taken monthly, quarterly or annually depending on your needs. If you have not yet taken your entire minimum withdrawal for 2025, you should consider whether it makes sense to delay your withdrawals to benefit from the potential 25% reduction for this year.
Tax rate decrease for the lowest tax bracket
Another Liberal campaign proposal was to decrease the tax rate payable on income in the lowest tax bracket by 1%. Based on 2025 tax rates, this would mean paying 15% instead of 14% on up to $57,375 of taxable income. Taxpayers are currently entitled to a tax-free federal basic personal amount of $16,129 if their net income is less than $177,883. Paying 1% less in the lowest tax bracket would mean savings of up to $412 on income between $16,129 and $57,375 for this year’s tax brackets. Tax thresholds and the basic personal amount generally rise annually.
