Some families are pulling ahead faster than others
Canada’s income and wealth disparities widened in 2025, as lower-income households faced weaker earnings growth while higher-income groups benefited from strong financial market gains, according to a new report from Statistics Canada.
The agency said the income gap – measured as the difference in disposable income share between the top 40% and bottom 40% of households – rose to 46.7 percentage points in 2025, up from 46.4 a year earlier. The increase reflects uneven economic conditions, including slower wage growth and declining returns on interest-bearing savings, which disproportionately affected lower-income households.
Average disposable income rose 3.8% overall to $104,430, but gains were uneven. Households in the lowest income quintile saw income rise 2.6%, compared with a 4.1% increase among the highest earners. Statistics Canada attributed weaker growth among lower-income households to modest wage increases and declining net investment income, particularly from reduced returns on deposits.
By contrast, higher-income households saw stronger income growth driven by gains in self-employment income and investment returns, supported by rising equity markets. The report noted that wealthier households tend to benefit more from equities than from interest-bearing assets, amplifying disparities during periods of market strength.
Financial pressures also intensified for lower-income groups. Net saving declined as consumption – particularly spending on housing, utilities, and transportation – outpaced income growth. Households in the second income quintile recorded the steepest drop in net saving, falling 7.9% compared with the previous year, raising the likelihood of increased borrowing to cover expenses.
The wealth gap also expanded. The top 20% of households accounted for 65.7% of total net worth by the end of 2025, averaging $3.5 million per household, while the bottom 40% held just 3.0%, with an average of $81,650. The overall wealth gap reached 62.7 percentage points, up 0.6 percentage points from a year earlier.
Overall household net worth rose 5.3%, driven entirely by a 9.9% increase in financial assets, particularly equities. However, declining real estate values and rising mortgage debt limited gains for less wealthy households, which recorded slower net worth growth of 2.1%.
The widening income and wealth gaps are unfolding against a backdrop of slower economic growth and persistent uncertainty, with recent data pointing to modest labour market gains and cautious monetary policy.
Analysts have projected Canada’s economic growth to remain subdued through 2026, constrained in part by ongoing trade tensions and weaker external demand, according to Reuters. Employment trends have also shown limited momentum, with only modest job creation in early 2026 and unemployment holding at about 6.7%.
At the same time, the central bank has held its policy rate at around 2.25% following earlier cuts, aiming to support economic activity while balancing inflation risks. Housing dynamics have added to the complexity, as recent adjustments to migration levels have begun to ease some cost pressures, though affordability challenges remain for many lower-income households.
