The income gap in Canada increased in 2025 as lower income households were negatively affected by declining interest rates and weak growth in employment income. The wealth gap grew throughout 2025 as continued strong financial market gains benefited the wealthiest, reported Statistics Canada.
The income gap—defined as the difference in the share of disposable income between households in the top 40% and the bottom 40% of the income distribution—reached 46.7 percentage points in 2025, up from 46.4 percentage points a year earlier, said the federal agency.
“Households’ ability to maintain their economic well-being differs with changing macroeconomic conditions. In response to easing inflation, the Bank of Canada’s policy rate stood at 2.25% by the end of 2025, down 1.0 percentage points from a year earlier. While declining interest rates can moderate borrowing costs, they can also lead to lower returns on interest-bearing investments such as savings and deposit accounts, with varying impacts for households across the income distribution,” said Statistics Canada.
“Labour market conditions can also have varying impacts on household income. Wages grew by an average of 3.1% in 2025 compared to a year earlier, a slowdown from annual increases of 3.3% in 2024 and 3.7% in 2023. Wage earnings were notably weak in 2025 for goods-producing sectors such as mining and oil and gas extraction, agriculture, and manufacturing, and services-producing sectors such as professional and personal services, transportation and storage, and information and cultural industries.
“The lowest income households (bottom 20% of the income distribution) increased their average disposable income at a below average pace in 2025 (+2.6% vs. +3.8% for all households), due mainly to relatively weak gains in wages (+2.3%) and self-employment income (+3.9%). The lowest income households reduced their average net investment income, as a decline in average investment earnings (-$443), mostly from negative returns from interest-bearing deposits, outweighed lower interest payments (-$267). Increases in net transfers, especially for social assistance and government retirement benefits combined with lower tax payments, offset weak gains in employment income.”
The report said net saving worsened in 2025 for lower income households as growth in consumption expenditure—especially for housing and utilities, insurance and financial services, and transportation and storage—outpaced growth in disposable income, due mainly to a relatively weak gain in employment income and a decline in investment earnings.
“Net saving worsened the most for households in the second 20% of the income distribution in 2025 relative to a year earlier (-7.9%), as the growth in their average disposable income (+2.3%) was lower than the pace of their average consumption expenditures (+3.8%). These households may be bridging the gap between income and consumption through borrowing,” it said.
“The highest income households recorded the largest improvement in net saving (+3.9%) in 2025 as growth in their disposable income (+4.1%) outpaced consumption expenditures (+3.9%).”
The wealthiest households (top 20% of the wealth distribution) accounted for almost two-thirds (65.7%) of Canada’s total net worth at the end of 2025 (i.e., fourth quarter of 2025), averaging $3.5 million per household. Meanwhile, the least wealthy households (bottom 40% of the wealth distribution) accounted for 3.0% of total net worth, averaging $81,650 per household. Overall household net worth increased at the end of 2025 relative to a year earlier (+5.3%), entirely due to a strong gain in financial assets (+9.9%), mainly from equity markets. Despite an increase in overall mortgage debt (+4.2%) at the end of 2025, the value of households’ real estate assets declined (-0.7%) along with lower average housing values, while growth in consumer durables (+3.4%) was partially offset by an increase in associated non-mortgage liabilities (+2.7%), explained Statistics Canada.
The gap in wealth between households in the top 20% and the bottom 40% reached 62.7 percentage points at the end of 2025, up 0.6 percentage points from a year earlier, it said.
Mario Toneguzzi
Mario Toneguzzi is Managing Editor of Canada’s Entrepreneur. He has more than 40 years of experience as a daily newspaper writer, columnist, and editor. He was named in 2021 and 2024 as one of the top business journalists in the world by PR News. He was also named by RETHINK to its global list of Top Retail Experts 2024, 2025 and 2026.
About Us
Canada’s Entrepreneur is the number one community media platform in Canada for entrepreneurs and business owners. Established in 2016, our podcast team has interviewed over 800 Canadian entrepreneurs from coast-to-coast. With hosts in each province, entrepreneurs have a local and national format to tell their stories, talk about their journey and provide inspiration for anyone starting their entrepreneurial journey and well- established founders.
The commitment to a grass roots approach has built a loyal audience on all our social channels and YouTube – 500,000+ lifetime YouTube views, 250,000 + audio downloads, 50,000 + average monthly social impressions, 15,000 + engaged social followers and 120,000 newsletter subscribers. Canada’s Entrepreneur is proud to provide a local, national and international presence for Canadian entrepreneurs to build their brand and tell their story
