Turns out the July federal tax cut has some fine print [Video]

The income-tax cut expected July 1 is not quite the gift it’s made out to be.

The federal government says reducing the rate on the lowest tax bracket by a percentage point, to 14 per cent, will save two-income families as much as $840 a year in 2026. But there are also some tax takeaways that may reduce the overall benefit for taxpayers.

Blame the inner workings of our tax system. The lowest tax rate is used not only to calculate tax owing but also the dollar amount of non-refundable tax credits such as the basic personal amount, the medical expense tax credit, the home buyers’ amount and the first $200 of charitable donations. Cut the lowest tax rate and you cut the rate on tax credits such as these.

The total cost to the federal government would be $5.8-billion in the 2026-27 fiscal year, which is considerable. “But, yes, it would have …