Both the income gap and the wealth gap increased in 2025 as lower income households were negatively affected by declining interest rates and weak growth in employment income, and strong financial market gains benefited the wealthiest, according to Statistics Canada.
In the last quarter of the year, the income gap between families in the top 40% and bottom 40% of the income distribution was 46.7 percentage points, up slightly from 46.4 percentage points in 2024.
The Bank of Canada’s policy rate stood at 2.25% at the end of 2025, down 1 percentage point from a year earlier. While a lower rate dampened borrowing costs, it also led to lower returns on interest-bearing investments.
The bottom quintile of households only saw wage gains of 2.3% in 2025, compared to 3.1% for all households. But increased government transfers for social assistance, retirement benefits and lower tax payments offset weak employment income growth.
Meanwhile, the average disposable income for the top quintile of households was 4.1%, mainly from above-average gains in self-employment income (9.1%) and transfer payments (4.7%) through increased employer-sponsored retirement benefits.
Disparity in savings, wealth
Net saving worsened in 2025 for lower income households as higher costs for housing, utilities, insurance, financial services and transportation outpaced growth in disposable income. Net savings for the bottom quintile of families fell by 7.9% as their growth in disposable income (2.3%) was lower than the pace of their consumption expenditures (3.8%).
In contrast, households in the highest income quintile saw the largest improvement in net saving at 3.9% in 2025 as growth in their disposable income (4.1%) outpaced a rise in consumption expenditures (3.9%).
Overall household net worth at the end of 2025 grew by 5.4% compared to a year earlier, mainly from strong gains in equity markets.
The wealthiest 20% accounted for 65.7% of this country’s total net worth at the end of last year, averaging $3.5 million per household. Meanwhile, the bottom 40% accounted for just 3% of total net worth, averaging $81,650 per household.
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.
The least wealthy households grew their net worth at the slowest pace, 2.1% compared to 5.3% for all households, mainly from below average gains in financial asset value. They also increased their mortgage debt throughout 2025 to buy homes as housing prices dipped. However, the 3.5% increase in real estate value was more than offset by the 7.5% increase in mortgage costs.
On the flip side, the wealthiest households increased their net worth at the fastest pace at 6%, with the strongest growth in financial asset value while mortgage debt grew 0.7%, the lowest rate of any wealth group.