Income and Wealth Gap Widens in Canada as High Earners Pull Further Ahead

Income inequality in Canada widened during the third quarter of 2025, driven by slower wage growth, falling interest income for lower earners, and strong gains in financial markets that disproportionately benefited wealthy households, according to a new report released Thursday by Statistics Canada.

The study shows that the income gap between households in the top and bottom 40 per cent of the income distribution rose to 47.5 percentage points in the third quarter of 2025. That marks an increase from 46.3 points during the same period a year earlier. The rise follows second-quarter data, released in the fall, which had already placed the gap at a near-record level.

Statistics Canada attributed the widening gap largely to challenges faced by lower-income households. Declining interest rates reduced investment and savings income for these groups, while self-employment earnings also weakened. At the same time, middle-income households experienced a deterioration in net savings, mainly due to sluggish wage growth.

In contrast, wealthier Canadians continued to benefit from strong performance in financial markets. The agency noted that gains in equities and other financial assets significantly boosted the net worth of higher-income households, further expanding the wealth divide.

By the third quarter of 2025, the wealthiest households controlled 65.5 per cent of Canada’s total net worth — nearly two-thirds of the national total — with average wealth of about $3.5 million per household. At the other end of the spectrum, the least wealthy households held just 3.1 per cent of total net worth, averaging roughly $82,100 each.

Wealth growth was also fastest among the richest households, with net worth rising 6.3 per cent over the quarter, reflecting their heavier exposure to financial assets. Overall wage growth slowed during the period, increasing by an average of 2.7 per cent compared with 3.4 per cent a year earlier.

The report highlighted that households in the lowest income bracket — the bottom 20 per cent — were the only group that did not see an increase in average disposable income. Meanwhile, the top 20 per cent of income earners recorded the strongest wealth gains, supported by increases in both wages and self-employment income.

Age-based trends showed a mixed picture. Households headed by individuals aged 35 or younger saw their wealth grow at the fastest pace of any group, up 7.4 per cent in the third quarter, largely due to rising values of financial assets. Younger households also made progress in reducing leverage, cutting their debt-to-income ratio by 1.3 percentage points to 167.2 per cent.

Canadians aged 35 to 44 continued to carry the highest debt burden, with a debt-to-income ratio of 245.4 per cent, though this was down 3.9 percentage points from a year earlier. According to the agency, these reductions were mainly the result of strong income growth that outpaced new borrowing.

Overall, the findings point to a growing divide in both income and wealth, as financial market gains and uneven income growth continue to benefit higher earners more than the rest of the population.