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Lower tax bills make life more affordable for Albertans

Indexing the personal income tax system will save taxpayers an estimated $55 million in 2016 and a further $70 million in 2017.

Alberta’s personal income tax system is adjusted annually with inflation, ensuring the value of Albertans’ tax credits is not eroded over time and that taxpayers are not pushed into higher brackets by inflation. As Albertans file their 2016 tax returns, they will notice their tax credit amounts were increased by 1.3 per cent, raising their basic personal and spousal amounts from $18,214 to $18,451 for 2016. In 2017, Albertans will see these amounts— already the highest in Canada—increase by another 1.3 per cent, to $18,690.

“Alberta’s exemption amounts and tax credits mean a typical family of four can earn up to $51,196 this year before paying any provincial income tax. That’s more money in every family’s pocket and is an example of how our government is working to make life affordable for Albertans.”

Joe Ceci, President of Treasury Board, Minister of Finance

With the highest basic personal and spousal amounts, no sales tax, and no payroll tax, Albertans benefit from the lowest overall taxes among the provinces.

For the 2016 tax year, a one-income couple earning $75,000 with two children in Alberta will pay $3,555 less in total provincial taxes than they would in British Columbia, and $1,380 less than they would in Saskatchewan. In 2017, the same couple will pay $4,094 and $1,825 less in total provincial taxes, respectively.

In 2016, Albertans and Alberta businesses enjoyed a $7.5 billion tax advantage over the next lowest-taxed jurisdiction. This year, that advantage will grow to approximately $8.7 billion.

Quick facts

  • In 2016, basic personal and spousal amounts increased 1.3 per cent, saving Albertans an estimated $55 million.
  • This year, these amounts will increase again by 1.3 per cent, saving Alberta taxpayers an estimated $70 million.
  • Benefit amounts and phase-out thresholds for the Alberta Child Benefit and Alberta Family Employment Tax Credit are also indexed to inflation.
  • Indexation of Alberta’s personal income tax system is based on the year-over-year change in the Alberta Consumer Price Index for the 12-month period ending Sept. 30.

Indexation of Alberta’s Personal Income Tax Brackets

Bracket

Tax Rate (%)

Income Bracket

2016

2017

1

10

Up to $125,000

Up to $126,625

2

12

$125,000.01 to $150,000

$126,625.01 to $151,950

3

13

$150,000.01 to $200,000

$151,950.01 to $202,600

4

14

$200,000.01 to $300,000

$202,600.01 to $303,900

5

15

$300,000.01 and up

$303,900.01 and up

Alberta Taxes, 2016 and 2017

 

2016

2017

Employment Income of $35,000
One Income Family with Two Children

     Provincial income tax

(1,774)

(2,147)

Employment Income of $75,000
One Income Family with Two Children

     Provincial income tax

2,683

2,455

Employment Income of $100,000
Two Income Family with Two Children

     Provincial income tax

4,776

4,676

Employment Income of $200,000
Two Income Family with Two Children

     Provincial income tax

13,182

13,082

  • Tax amounts include the Alberta Child Benefit and Alberta Family Employment Tax Credit.
  • RRSP/RPP contributions of $0, $6,000, $10,000 and $25,000 are included in the calculation of personal income tax for the $35,000, $75,000, $100,000 and $200,000 families, respectively.
  • For two-income families, income and RRSP/RPP contributions are split 60/40 between the two spouses.
  • The children are assumed to be 6 and 12 years old.

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