Canada’s income gap widened in 2025, as weaker wage growth and lower returns on savings weighed on lower-income households, while higher-income groups benefited from strong financial markets.
The gap in disposable income between the top 40% and bottom 40% rose to 46.7 percentage points, up slightly from a year earlier, reflecting diverging sources of income. Slower wage growth and softer labour conditions limited gains for many workers in goods-producing industries and the service sector.
Lower-income households saw their disposable income rise by 2.6%, below the national average. Wage gains were modest, and investment income declined as returns on deposits fell with lower interest rates. Government transfers helped offset some of the pressure but did not fully close the gap.
Higher-income households recorded stronger income growth of 4.1% due to higher self-employment income and stronger investment returns, supported by rising equity markets.
Savings trends show a widening divide. Lower-income households saw their financial position weaken as spending rose faster than income, particularly for housing, utilities and transportation. Households in the second income quintile recorded the sharpest drop in net saving, suggesting increased reliance on borrowing.
Wealth inequality also increased. The top 20% of households held 65.7% of total net worth at the end of 2025, while the bottom 40% held just 3%. Overall household wealth rose 5.3%, due to gains in financial assets, while real estate values declined slightly.
The gains were concentrated among wealthier households, whose net worth rose faster due to stronger growth in financial assets and slower increases in debt. Lower-wealth households saw smaller gains, as rising mortgage costs offset increases in property values.
Younger households recorded above-average growth in wealth, largely from financial assets. However, debt levels remained elevated. Their debt-to-income ratio declined, but debt servicing costs stayed high, reflecting ongoing pressure despite lower interest rates.
Older households increased mortgage borrowing at a faster pace, pointing to shifting financial behaviour across age groups.
The data points to a growing divide driven less by wages and more by asset ownership.